Speaker #1: Good day, and welcome to the ADNOC Distribution Investor Call Q3 2026 earnings. Today's conference is being recorded. At this time, I'd like to turn the conference over to ADNOC Investors.
Speaker #1: Please go ahead.
Speaker #2: Good afternoon, everyone, and thank you for joining us for the ADNOC Distribution Q3 and nine-month 2026 earnings call. I am the Chief Strategy, Transformation, and Sustainability Officer at ADNOC Distribution, and it's a pleasure to have you with us.
Speaker #2: I'm joined today by our Chief Executive Officer, Vader Lemke, and our Chief Financial Officer, Ali Siddiqui. Let me start by outlining today's agenda. Vader will open with a reflection on our ambition, speak about the outlook, and then share the key highlights of our record results.
Speaker #2: I would then walk you through how we are executing our growth agenda on the ground. Ali will share a detailed look at operating and financial performance.
Speaker #2: We will then open the floor for your questions. Before we begin, a brief note on forward-looking statements. Today's presentation contains forward-looking statements that are subject to risks and uncertainties, and actual results may differ.
Speaker #2: Please refer to the full disclaimer on this slide, which is also available on our website. With that, I will hand over to Vader.
Speaker #3: Thank you, Othman. We are building one connected mobility and convenience journey, inspired by our loyalty program and supported by strong brand. A customer's visit can start before arrival, with a personalized offer or a coffee order, and continue through fueling or charging, convenience ce shopping, and car care.
Speaker #3: Our ADNOC Rewards loyalty program connects these interactions and helps us make the next customer's visit more relevant. Our opportunity is to serve more of our customers' everyday needs across our network under a brand that they can trust.
Speaker #3: That means better food and coffee, reliable vehicle service, and destinations where customers can spend time while they are recharging. Our strong track record and 9-month results reflect the progress of this ambition.
Speaker #3: We delivered record earnings while continuing to invest in the experience that will support future growth. Let me explain how these priorities fit together. First, we are strengthening the core through disciplined network expansion and a more compelling non-fuel customers' proposition.
Speaker #3: We are also scaling fast and super-fast EV charging infrastructure across highways and urban areas. The Hub by ADNOC delivers it all—a destination designed to meet evolving expectations for convenience, speed, and lifestyle.
Speaker #3: Second, we are extending the core through partnership and digital capabilities. Partnerships such as Americana, broaden our food offering while fab co-branded card brings new customers.
Speaker #3: Digital capabilities include ADNOC Rewards and Engage by ADNOC, ADNOC Rewards helps us understand customers and serve them more efficiently. Engage by ADNOC creates a new advertising revenue opportunity for our network and customers' reach.
Speaker #3: Third, we're expanding the core selectively into new attractive markets. One example is the proposed acquisition of Shell Downstream South Africa, representing the next major step.
Speaker #3: Our strategy builds on the strengths we have developed across our existing markets. Across these priorities, our investment approach remains disciplined. We want growth that increases earnings and cash generation, while preserving our ability to deliver attractive shareholder distributions.
Speaker #3: Let me take a step back. Our ambition is built on a strong foundation and track record of delivery. Over the past 5 years, we have doubled our network to over 1,080 service stations across 3 markets: the UAE, Kingdom of Saudi Arabia, Egypt, where total fuel volumes increase on average by 12% every year.
Speaker #3: More than doubled the number of loyalty customers to 2.9 million members. Today, more than half of UAE drivers are ADNOC Rewards members. We more than doubled non-fuel retail gross profits.
Speaker #3: The business has been growing much faster than fuel business, and more than 16% every year. This has been supported by coffee cups sold to our customers, growing at 23% annually.
Speaker #3: From the financial perspective, we have achieved average growth of 12% every year in underlying EBITDA, EBITDA, and net profit. Return on capital employed exceeded 30% and is more than 2 times the global sector average.
Speaker #3: These results give us confidence in the capabilities we have built. They also reinforce our commitment to apply the same investment discipline as we scale the platform.
Speaker #3: Now turning to the first 9 months of 2026, our strategy execution pays off. We delivered record EBITDA and net profit up 26% and 37% respectively.
Speaker #3: Underlying EBITDA has also increased at double-digit rate. So what has been driving this growth? GCC retail volume returned to growth in the third quarter following the temporary second quarter decline.
Speaker #3: Non-fuel retail gross profit grew by 13%, more than 2 times the growth rate of fuel retail gross profit excluding inventory effects. Our growth outlook is reinforced by our strategy to double down on non-fuel retail through a number of new value-accretive initiatives, upgrading our new stations' guidance by 30% to 80 to 90 additional stations for 2026.
Speaker #3: We have already delivered 71 stations in the first nine months of this year, above the previous guidance of 60 to 70 new stations. Following our strong delivery so far, we expect 2026 net profit to grow at double digits.
Speaker #3: 2026 dividend to exceed 700 million, under our existing dividend policy, subject to board and shareholders' approval next year. Now, about the proposed acquisition of Shell Downstream South Africa.
Speaker #3: We are progressing in August. We agreed on a long-term partnership with Ratel Group in support of South Africa's broad-based Black Economic Empowerment framework. We also commenced regulatory filing during the third quarter.
Speaker #3: Completion remains expected in 2027, subject to regulatory approvals and customer closing conditions. What you need to remember is that the transaction represents a compelling investment case, with shareholders' return above the communicated return hurdle rate.
Speaker #3: We expect the transaction to increase earnings per share by 6% from year 1 post-closing, with an estimated free cash flow yield of around 15%.
Speaker #3: Also, the transaction combines an established business with opportunities to apply our retail capabilities. It provides 30 to 40 million of annual run-rate EBITDA upside by year 5 post-closing.
Speaker #3: What you get as a shareholder is a broader earnings base and the potential for higher dividends, faster, subject to relevant approvals. Othman will now discuss how we are executing our growth strategy.
Speaker #2: Thank you, brother. As highlighted by our CEO, the fuel business demonstrated its resilience through a volatile period. GCC volumes returned to growth in the third quarter, taking nine-month volumes to a new record.
Speaker #2: We maintained round-the-clock operations without compromising safety and supply continuity. In the corporate business, we are prioritizing margins. As a result, stronger pricing and portfolio management improved profitability despite lower corporate volumes.
Speaker #2: This combination helps us grow earnings while remaining disciplined about capital and returns. As part of our future-proofing strategy, we continue disciplined network expansion of EV charging infrastructure.
Speaker #2: We align new capacity with adoption and demand using our existing locations and convenience offer. We ended September with 433 charging points, an increase of 18% year-on-year, while energy sold more than doubled.
Speaker #2: This helps us address customer anxiety. We not only offer fast charging in strategic and convenient locations, providing confidence to customers that charging options will be available when needed, but also create more options for food and beverage purchases during their visit.
Speaker #2: In addition to fast-growing retail customer electric vehicle park, we are now scaling into B2B segment that is becoming an important source of charging demand.
Speaker #2: Taxi, logistics, and corporate partnerships help anchor utilization across our growing platform. In line with our guidance, we remain focused on adding 50 to 60 charging points this year, and we are progressing towards our medium-term target of 500 to 750 charging points by 2028.
Speaker #2: Let me now run you through our structural growth engine. The non-fuel retail business. It has become an increasingly important contributor to our earnings. 9M non-fuel gross profit, more than doubled from 103 million dollars in 2021 to 217 million dollars in 2026, equivalent to 16% compound annual growth.
Speaker #2: To sustain our growth, we have a clear development pipeline across convenience stores, property management, and car services. In 9M, non-fuel retail gross profit continued to grow more than twice as fast as fuel retail, excluding inventory gains.
Speaker #2: Non-fuel retail transactions increased by 2%, while gross profit rose by 13%. The difference reflects stronger convenience store margins see store gross profit increased by 9%, supported by improved customer offerings and growing food and beverage category.
Speaker #2: One of our hero categories, coffee, increased by 11%, reinforcing the role of barista prepared drinks in our F&B strategy. The difference also reflects the growing contribution from property management.
Speaker #2: It remained our fastest-growing non-fuel vertical, with double-digit gross profit growth. We will continue to focus on our products and services that strengthen customer loyalty and improve the profitability of each visit.
Speaker #2: In that context, Oasis is central to our convenience proposition. Last year, brand refreshment combines better fresh food and barista prepared drinks, along with a more relevant store assortment based on AI clustering, which helps us tailor ranges and pricing to each location and shopping mission.
Speaker #2: Our Healthier Living campaign supports trial and repeat purchase of healthier food and beverage, while Private Label extends our proprietary range. With higher pump prices, customers made more frequent fueling visits, which led to a conversion from fuel to convenience stores of 25% compared to 26% a year earlier.
Speaker #2: That said, convenience stores gross profit nevertheless increased by 9% in the quarter. We have new exciting Oasis initiatives focusing on building a stronger Oasis customer proposition.
Speaker #2: Our private label will soon provide a wider range across ready meals, yogurt, fresh juices, and coffee products. Our other initiatives drive repeat purchasing habits.
Speaker #2: The ongoing coffee streak offer encourage customers to return within 24 hours, prepaid beverage bundles through the Adoc Rewards app provide another reason to buy regularly.
Speaker #2: Finally, the Win with Oasis raffle translates purchases into raffle tickets. These are new initiatives which we will contribute to future growth. Another vertical of non-fuel retail worth mentioning is the car care business.
Speaker #2: It gives us another opportunity to make our locations more relevant to customers as part of one connected mobility and convenience journey highlighted earlier by our CEO.
Speaker #2: We are using targeted campaigns and Adnoc Rewards offers to attract customers who are not using our car washes and bring back customers who are not visited for some time.
Speaker #2: Our long-term ambition is building a one-stop car care destination proposition for our customers. With fast, reliable maintenance, a broader range of mechanical, tire, and diagnostic services.
Speaker #2: We are applying the same principle as convenience retail, giving customers more reasons to return. Property management remains our fastest-growing non-fuel vertical, with double-digit gross profit growth in 9M.
Speaker #2: We have improved the tenant mix to offer more quick-service restaurant to customers, and increased our rental revenues. Food and beverage and car care added 61 units, with ATM and other non-fuel units declined by 27.
Speaker #2: Out of 61 units, 40% are new units from anchor brands, which helped attract additional footfall. Our Americana partnerships complement that expansion, with 14 restaurants already operational and a further 13 planned before the year-end.
Speaker #2: We are growing at scale. Our largest property format, The Hub, brings all offerings together in a large retail format. Community locations serve neighborhood needs, while highway locations support commuters and longer journeys.
Speaker #2: We now operate 8 hubs and target 30 by 2030. AI is wired into how we serve customers and run the network, with more than 20 initiatives in motion.
Speaker #2: It's what makes our one connected mobility and convenience journey work. For customers, we know you, so we make offers and ranges that fit. Store clustering gets the right products on the right shelves.
Speaker #2: AI checkout and digital support mean less waiting, more going. Now, behind the scenes, fuel forecasting keeps the products where it's needed. Workforce optimization puts the right people in the right place at the right time, even as we grow.
Speaker #2: Engage by Adnoc turns our locations, digital channels, and customer insights into a new retail media revenue stream. What matters is results we can measure.
Speaker #2: Better availability, deeper engagement, higher profitability. And it all comes back to one thing: making every visit so easy that customers keep coming back and trust us when they do.
Speaker #2: Badr will pick up that thread at the close, but first, let's talk numbers. Over to Ali.
Speaker #3: Thank you, Atman, and good afternoon, everyone. I will now connect the operating progress to our financial performance, beginning with earnings and then looking at volume, segment contribution, costs, and cash generation.
Speaker #3: Unless stated otherwise, the figures I will discuss relate to the first nine months of 2026 and comparisons year on year. We delivered record nine-month EBITDA of more than $1.1 billion, up 26%, and net profit attributable to shareholders of $791 million, up 37%.
Speaker #3: Underlying EBITDA, which excludes inventory movements and one-off items, also increased at double digit, up 14%, to 944 million dollars. This reflects growth in non-fuel retail, stronger corporate margins, and disciplined cost management alongside higher fuel volumes.
Speaker #3: The distinction between reported and underlying performance matters. Inventory movements can vary between periods, while underlying EBITDA gives a clearer view of the progress across our operating businesses.
Speaker #3: The operating data supports the earnings performance. Total fuel volume is just under 12 billion liters, an increase of 1.3%. Retail volume grew by 1.2%, while commercial volume increased by 1.6%.
Speaker #3: In the UAE, fuel transactions increased by 6%, to 156 million transactions, and non-fuel transactions by 1.9%, to just over 40 million transactions. GCC retail volume returned to growth in the third quarter and reached a nine-month record.
Speaker #3: Within commercial, stronger aviation demand offset the deliberate reduction in corporate B2B business following the targeted rationalization of low margin and tail-end customers. We continue to manage for profitable growth.
Speaker #3: Volume is one part of that assessment, alongside customer mix, pricing, and the contribution from non-fuel activities. Total gross profit reached $1.67 billion in the first 9 months, up 20%.
Speaker #3: Fuel retail gross profit grew by 17%, supported by higher volume and inventory gains. Non-fuel retail gross profit rose by 13%. Convenience stores contributed through more transactions and improved margins, while property management and car care broadened the contribution.
Speaker #3: Commercial gross profit increased by more than 30%. Proactive pricing and customer portfolio management improved profitability, supported by inventory gains. Across the portfolio, these results show the contribution from our operating initiatives and underline why we separate inventory effects when assessing the underlying performance of the business.
Speaker #3: Cash OPEX increased by 4.6% in the first 9 months of the year, reflecting the expansion of our retail business and network. We continue to distinguish the costs associated with revenue generation from opportunities to improve efficiency within the existing business.
Speaker #3: Our focus includes workforce planning and productivity, supported by automation and better scheduling. Energy efficiency, logistics optimization, and procurement savings also contribute, alongside the centralization of support activities.
Speaker #3: We remain on track for our target of up to 50 million dollars in like-for-like operating cost savings over 2024 to 2028. The objective is to support a larger business with better cost discipline while maintaining service quality, operational reliability, and, most importantly, safety.
Speaker #3: The segment EBITDA performance reflects contributions from across the businesses. Retail EBITDA increased by 25%, supported by volume growth, non-fuel retail, and higher inventory gains.
Speaker #3: Commercial EBITDA increased by 29%, reflecting proactive margin management and the strong performance of our corporate activities. Together, these contributions lifted Group EBITDA by 26%.
Speaker #3: Underlying EBITDA increased by 14%, supported by non-fuel retail growth and stronger margins alongside operating efficiencies. Our earnings base now benefits from several distinct sources of growth.
Speaker #3: That gives us more ways to improve profitability while continuing to invest in the network and customer proposition. Free cash flow before working capital movements exceeded $900 million, and increased by 55% year-on-year.
Speaker #3: This measure separates operating cash generation from the timing effects of working capital. Net debt to EBITDA stood at below 0.6 times, leaving capacity to invest in growth while supporting shareholder distributions.
Speaker #3: Full-year capital expenditure guidance remains 250 to 300 million dollars a year. We will continue to balance investment opportunities with financial discipline and our distribution commitments.
Speaker #3: With that, I will hand back to Badr for closing remarks.
Speaker #1: Thank you, Ali. We have now heard the numbers, the strategy, and the plan. Let me close with what sits behind all of them: our customers.
Speaker #1: Every day, in every market we serve, people choose where to stop. For a morning coffee, a quick top-up, a car wash on the way home, a charge on a long drive.
Speaker #1: Those choices take seconds, but they are built over a year of trust. That is what scale means to us, not just more stations, but more moments, more reasons to return, and a bigger part of everyday's life.
Speaker #1: Our ambition is simple: to be the brand customers think of first, and trust to make every journey easier. We want to be in the hearts and minds of people.
Speaker #1: We serve across our network. That customers’ loyalty is what powers our growth engine, and it keeps us delivering. Our diversified platform is growing across core markets, with resilient volume and double-digit non-fuel retail gross profit growth.
Speaker #1: The proposed SDSA acquisition, subject to regulatory approvals, opened the next chapter of growth. And that is how value is created and shared with our shareholders.
Speaker #1: Our dividend framework combines a $700 million annual floor with an upside from future earnings growth through the 75% payout. We expect the 2026 dividend to exceed that floor, subject to Board and shareholders' approval.
Speaker #1: Our focus remains on profitable expansion and cash generation, so that growth translates into sustainable shareholders' returns. Thank you for your trust and your continued interest in ADNOC Distribution.
Speaker #1: We would now be pleased to take your questions.
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Speaker #2: And we'll now go to our first question.
Speaker #4: Good day. It's Anikesh Maria from UBS. Hopefully, you can hear me. I have a couple of questions, if I may. Probably the first is around Egypt.
Speaker #4: There were some, media reports, a couple of months ago that you might be considering of expanding your, fuel retail, footprint in the country. and I think it would be a bit, different, to what we previously discussed, that you prefer to go in B2B segment and expand there in Egypt.
Speaker #4: So can you please comment on that side, whether something changed around your, strategy view from, for the Egyptian market? My second question would be around, current environment, and your fuel retail sales.
Speaker #4: What do you see quarter to date, and, i-if there are any comments around how, how the, retail fuel sales volumes are shaping up, in fourth quarter?
Speaker #4: And my final question will be just quick on the one-off item. It looks like your underlying EBITDA is slightly higher than reported EBITDA, and given that the inventory moves were netted out in retail and commercial, it most likely is related to a one-off.
Speaker #4: Can you please just give some comments around what it could be? Thank you very much.
Speaker #3: Hello, Ana. Hi, Atman here. So I-I'm going to leave the floor to, to Ali on the, on the fuel, and then I'm going to answer on, on, on Egypt.
Speaker #5: I'll take Egypt.
Speaker #3: Okay. So starting off, I think on Egypt, Ana, we don't hi, Ana. On Egypt, we obviously, do not comment on the portfolio, related stuff.
Speaker #3: As a company, we're always looking for opportunities and stuff, but do not specifically comment on the stuff. On one-offs, which you are seeing at the moment, part of it is, some of the, the employee buyouts.
Speaker #3: there are some of them, there's sort of one of the components is there. And the second component is, I have significantly slowed down. I was very, very conservative in the first few quarters, if you remember, in terms of my, expected credit loss provisioning, given the volatility.
Speaker #3: I've ve still remained conservative, but the degree of conservatism is, has gone down significantly. there is absolutely no, write-off on the table at the moment, or even a risk, but, we, we have exercised prudence, and that's why you're saying one-offs.
Speaker #3: We started classifying them as one-offs just to keep the, the earnings clean, basically for yourselves. so that, you have got the, the right impact.
Speaker #3: On the fuels, can you help me with the question again, Ana? On the fuels, your specific question?
Speaker #4: Just what you see on the market, quarter to date, in October, November, what's happening with fuel retail sales?
Speaker #3: Okay. S-so in terms of so you mean in terms of business activity, is it? The forward-looking, October, November?
Speaker #4: Yes.
Speaker #3: Yes. So we are seeing, we are seeing obviously good mobility, and, on the market, but yes, it's, is it exactly at the, at the, at the same levels as, as last year?
Speaker #3: That we would find out more in December, depending on how tourism and all these kind of things. So those are the moving pieces, Ana.
Speaker #3: We are seeing a lot of mobility, but, yeah, I think it's, it's a bit more jury's still out. We still have more than we are almost, one and a half months to go into the quarter with some of the, the peak periods, you know, to, to fun-fundamentally to follow, especially from a tourism lens.
Speaker #3: So, so I think that's how it would be. Yeah. And what about, I think, Ali's, Sorry. So I was just also just to complement what Ali was saying is that the volumes last year in, GCC, but more specifically in the UAE, were up at a high single digit.
Speaker #3: We are talking about seven, eight percent. So, of course, the, the base effect is, is, was, was, was high. So just on, on Egypt, as rightly said by, by Ali, look, the strategy has not changed.
Speaker #3: Whatever, first of all, we, we do not comment. This is one, two, but the way you look at capital allocation, and we have been very clear, we are looking at, any opportunity where we can create value, okay?
Speaker #3: But it has to be sizable for us, and this is where I will end. Thank you.
Speaker #4: Thank you very much.
Speaker #2: We'll go to our next call, or? Caller, your line is open. At this time, there's no response. We'll move up to our next question.
Speaker #1: Yes, hi. This is, Faisal Alazmi from Goldman Sachs. Congratulations on the, strong set of numbers, and thank you for the opportunity to ask questions.
Speaker #1: two, two on my end, just to follow up on the October, November trends, maybe just to kind of think about what the, high level of, petrol prices in October means for demand elasticity.
Speaker #1: Maybe if you can talk about this, in more detail. and then also, just maybe if we can also get a sense of, where inventory levels are likely to land at, at year-end, given the sharp move in, in October, and then the, the correction in, in, in, in November, how should we think about that?
Speaker #1: And then finally, just, in terms of, Q4, should we expect similar to last year any, provisions to take place? Thank you.
Speaker #3: Yes, thanks for the question. On terms of the prices, you saw the October prices, prices went up in October. They came down in November.
Speaker #3: So we are, we are seeing discretionary mobility where this can potentially impact. We are not anticipating any impact on the demand at the moment, driven by the size of the prices.
Speaker #3: this is our take. You've got mixed quarter already, one-month prices going up, the other one coming down. So I think that's the first. In terms of the provisioning, hard for me to, to give a guidance on that.
Speaker #3: It will vary on how the world is looking, on 31st of December specifically. and fundamentally, the, the volatile, but we usually try to exercise maximum prudence, and that is something which I have continued, since being on the seat, and it would be no different.
Speaker #3: So, hard to give a number, but, I would always keep at least, 10, you know, somewhere between 10 to 20 million dollars as a, as a placeholder.
Speaker #3: and if it's less, then it'll be good. But again, the, this is take this with a pinch of salt, please. it, it really would vary on how, how the environment and the business environment is looking like.
Speaker #3: As I said before, we are quite, comfortable in terms of we haven't seen any customer defaults or any of that sort, but we have obviously always exercised maximum prudence.
Speaker #3: Thank you.
Speaker #1: Thank you.
Speaker #2: We'll go to our next caller.
Speaker #5: Hi, this is Ram Kamal from Barclays. Can you hear me?
Speaker #3: Yes, we can.
Speaker #5: Hi, I have a few questions. First of all, you have maintained your full-year CapEx guidance of $250 to $300 million, while nine-month CapEx is around $170 million now.
Speaker #5: Should we therefore expect a meaningful acceleration in spending in 4Q? and on, aviation business, the volume has increased 40% year on year. including a particularly strong growth from GCC region.
Speaker #5: While the aviation, aviation EBITDA declined, somewhere around 25 to 27%, could you explain the divergence between volume and earning here? that would be helpful.
Speaker #5: Thank you.
Speaker #3: Okay. I guess that, the first question is more on the CapEx. it's.
Speaker #5: Yeah, yeah, thank you. Yeah, so indeed, I think $250 to $300 is the range, and we definitely, you know, we anticipate to close the year in that range.
Speaker #5: And yes, there is always acceleration in Q4. It tends to be, fundamentally, because the weather conditions and the construction conditions tend to be better.
Speaker #5: So, definitely, to answer your question, we will be within the range we have, and we basically have, guided, to the market. In terms of the, the aviation, it's, it's fundamentally the mix.
Speaker #5: and, and obviously the, the GCC aviation volume, fundamentally is a function of, of the geopolitics and, and the situation which happens here. And there is a fair bit of, product mix, which can have an im- which can have an effect, within that.
Speaker #5: Man, anything to.
Speaker #3: No, no, the, the product mix on the, , on the margins, I guess this is what you were, spotting, actually. And, and this is, coming from the increase in certain product, cost element, which, are not, are non-pass-through.
Speaker #3: And this is the reason why, you had, a low margin. But as, the situation improves, we expect anyway the margins to, to normalize.
Speaker #5: Okay, thank you.
Speaker #2: At this time, there are no further questions from the phones.
Speaker #4: we will take questions from the web. B2C network clearly many more fuel stations acquired in 3Q. That, that initially expected, were these exa-exact Saudi fuel stops that you, that you acquired this quarter already in the plan or for next, for next year?
Speaker #4: Or these are brand-new opportunities?
Speaker #3: Ali, please go ahead. Go ahead.
Speaker #5: Thank you, Aman. Yeah, so there isn't any we are not encroaching into any, next year's plan. I think the principle is very clear. We keep building the pipeline, and we keep maturing the pipeline.
Speaker #5: And that particular pipeline, we are quite comfortable. You're seeing the revised guidance to 80 to 90 stations this year, and that's fundamentally this year.
Speaker #5: It is not encroaching at all into the following year. Yes, we will see whether there and in the next year, how the, how, how this whole thing shapes up and, and whether the, the guidance all the way up to 2028, which we have already given, needs to be revised or not, but that would be seen later.
Speaker #5: But for now, it is all part of this year's pipeline, and it's being delivered, in excess of, of what we had set internally for our teams, and they are exceeding the targets.
Speaker #5: Thank you. And they are all JOCOs, remember. So this is all the capital-light phenomena continuing. So there is no unusual or extra draw on CapEx.
Speaker #5: Thank you.
Speaker #4: Right. On EV expansion, we have seen other distribution continues push towards development and the infrastructure. So far, how has the return on this investment been, and are the EV administration level in line with expectation or slower than what company has expected?
Speaker #3: Okay, so, we take this one. I guess the, the EV strategy is, resonates very well with the overall, I would say, one connected mobility and convenience journey that we want to create for our customers.
Speaker #3: And it is part of the, future-proofing strategy. So we are operating in the UAE market, where the mar- the margins actually and the prices are regulated, similar to what, the, fuel, prices and margins are regulated since 2015.
Speaker #3: So in the EV business, it is, very clear. The, the margins are, are, are set, so selling price and, and how much we buy, the electricity.
Speaker #3: The, key message is that this business is growing. This business, in this business, we have a competitive edge, which is our network, where we are investing in the disciplined manner across, the key highways.
Speaker #3: And today, we have 433 fast and super fast chargers. So we, provide convenience. We, answer the key pain point of the EV driver, which is anxiety.
Speaker #3: And also, when, the customer come to, charge their cars for 20, 25 minutes, they can enjoy all the facilities that we have. So the convenience stores with the new products, but also the quick service restaurants, etc., and Wi-Fi inside, ins-inside the convenience store.
Speaker #3: the second message is that the business is profitable. The business is, at the level of the 15% IRR, and, we are very, confident on the, EV infrastructure that we are putting in place.
Speaker #3: And as we mentioned in the presentation, we are now also tapping into B2B customers for this business.
Speaker #5: And if I may just build on what Aman rightly said, the business is indeed in a profitable zone at the current utilization levels and in line with the investment case as it was envisaged at the time of the investment decision.
Speaker #5: Thank you.
Speaker #4: Okay. Following the early target achievement of the retail stations, how should we look into 2027 and 2028? And would you consider raising your target of 1,150 by 2028?
Speaker #3: Well, the short answer is, first of all, give us the time to realize, first of all, the higher guidance that we provided this morning.
Speaker #3: So we are increasing the target for this year by 30%. I guess what is important is that, we are, targeting 1,150 stations by 2028.
Speaker #3: This is the guidance, and we will update the, market, next year anyway.
Speaker #4: Okay. Corporate margins continue to look strong versus historical level. What is driving this, and what should we expect for 2027?
Speaker #5: Okay, thank you for the question. corporate margins were obviously helped by the spot segment, and that spot segment, remember, is opportunistic. It is a function of the pricing environment.
Speaker #5: Now, we have all the pr- we have the customer relationships. We have the inventory, and we have the prices compared pricing competitiveness to get the max out of this segment, but it usually happens in a contango type setup when the prices are on the rise.
Speaker #5: Now, the choice we obviously always make is we only sell when there is profit opportunity, and we have the optionality not to sell when that opportun- that profiteering, that profit-making opportunity doesn't exist.
Speaker #5: So fundamentally, this remains one of our swing factors in our business. We sell spot every single year, but again, it's a pure function of the pricing dynamics in the marketplace.
Speaker #5: But we have all the capability, and resources, and inventory, and the molecules to, to make it happen when the opportunity presents itself. Thank you.
Speaker #4: All right. A question about the non-fuel. There has been a lot of focus on non-fuel retail as a key cross area. How do you see this is translating into revenue growth, margins, and earnings contribution over the next years?
Speaker #3: So, yeah, so, so the non-fuel retail is, definitely at, the cornerstone of, the strategy. But I guess what is important is, as highlighted by, our CEO, just earlier, we are building a one connected mobility and convenience journey.
Speaker #3: And this is inspired by the ADNOC Rewards app, where today we have close to 3 million customers. Again, the WGD increased last quarter, and we are talking about roughly 5.2 million cars in the UAE.
Speaker #3: So clearly, we are, gaining, this momentum in terms of loyalty. and NFR, where we are strengthening, and this is where the upside is and why we are confident in the growth going forward, is that we are, doubling, down on the non-fuel retail.
Speaker #3: You have some examples with the Oasis, rebranding last year. We, have been focusing on the FNB, and where, we are, also, putting in place the, private label products.
Speaker #3: And the up by ADNOC, so 30 up by 2030, contributing to 30 million dollars. You've seen also that, we have launched Engage by, ADNOC, where we are, leveraging our network, but, leveraging on the data, data monetization.
Speaker #3: So all this, puts us in, in the convenience that, the non-fuel retail will continue to grow faster than the fuel business. And again, fuel retail, non-fuel retail is a reason for the customer to come again and again.
Speaker #3: And this is where the focus is on consumer and making sure that we provide to our, customers, the maximum of services and, restaurants that they can come again and again to our stations.
Speaker #4: There are also a few questions about the, the upgraded guidance. so you are going to increase the number of gas stations by, by 80 to 90 from previously 67 to this year.
Speaker #4: Will you be adding the additional where are you going to add the additional 20 stations?
Speaker #3: So, so if I just take an aircraft of view, I would say, first is, is Saudi through the DOCO model that, Ali has mentioned, so CAPEX-like model.
Speaker #3: Second thing is that good news, we expect roughly, I would say, 5 stations in, in, in the UAE. and, and the remaining will be, will be Egypt, but, Egypt is, is, is very small in terms of, adding, new stations.
Speaker #4: a question regarding the CAPEX allocation. How do you prioritize between network expansion and convenience stores helps property management, etc.?
Speaker #3: Okay, so I, I'm going to start, but I'm sure that, Ali will, give me some, some support. from, from a strat-strategic point of view and, and the capital allocation, when we sit, with, with the businesses, so first of all, the, the strategy is very clear.
Speaker #3: What do we want to achieve? We want to grow at scale and be, an international, mobility and convenience player. So when we look at, UAE, where we are, putting, our efforts and, and tomorrow in, in, in Saudi Arabia, in, in, South Africa, beyond Saudi and, and Egypt, I guess the idea is, to use the data.
Speaker #3: So what we have is today in, in the UAE, roughly, I would say, 580 stations. And of course, we have screened all the stations, looking at the volumes and then the performance of each of the assets.
Speaker #3: And of course, we have been looking at optimizing and sweating the assets. So the capital allocation is really to, replace the, underperforming assets with, assets that can, derive much higher profitability.
Speaker #3: And you can see in our returns on capital employed, I would say the capital employed are above 30% now for the past, 5 years.
Speaker #3: and this is just showing you that the 200 and 300, 250, sorry, to 300 million dollars that we invest every year are, bringing, the higher, higher returns compared to the industry.
Speaker #3: I just remind everyone that return on capital employed of 30% is, I would say, roughly 2 times the sector average, okay? So then on the new, on, on, on the new, network, I would say, or, or, let me take, take the example of the up by, by ADNOC.
Speaker #3: So the up by ADNOC is a concept where we have, used, we are using unused land in, Abu Dhabi and where we are, future-proofing the earnings, where 90% of the earnings will be rental, and we are creating life, in, in the communities around, around, key, key strategic areas.
Speaker #3: And therefore, this is where we put the CAPEX that will also strengthen the overall, I would say, fuel demand there. Then we look at international, I would say, where you saw recently the proposed acquisition of Shell Downstream South Africa for an EV of $1 billion.
Speaker #3: the, strategy is the same. Look, we, we do not want to reinvent the wheel. We are very focused on making sure that we, stick to the strategy.
Speaker #3: It is to ensure that we have a network that has, high quality, but also potential where we can invest and, and, use the, track record of ADNOC distribution to transform, the stations into destination of choice.
Speaker #3: So this is the way the capital allocation strategy is made. And of course, we are looking at, at, at the, the, the overall returns and, Ali is, looking at me and always at the numbers and making sure that, that we have the right returns.
Speaker #3: And this is what, I would say, Ali, anything else you want to?
Speaker #2: No, you've, you've, said it all, and our return on capital sustained is our biggest testimonial that, we are obviously, we treat CAPEX as a, as a true, as a true sacred item.
Speaker #2: and it has to be treated as such and as Athman rightly said. fundamentally, the screening, is, is very, very stringent. Now, last, the only thing I would build on what Athman said is that overall, we try to keep it 70% growth and remainder 30% is asset integrity or some critical digital projects as an enabler ones and what have you, but 70%, we want to allocate to, to growth pretty much on the projects, which Athman rightly mentioned.
Speaker #2: Thank you.
Speaker #3: Okay, I guess, Huda, we know we don't have any further questions, if I understand well. Any? No? Okay. Okay. So thank you very much, everyone, for, participating.
Speaker #3: And, please feel free to reach out to the investor relation team and, good afternoon, everyone. See you. Bye-bye. Good evening.
