00
ADNOC Classification: Public
b;
AADDNNOOCC
DDIISSTTRRIIBBUUTTIIOONN
First Quarter 2023
Results
Management Discussion & Analysis Report
;
1 2 May 2023
Key highlights: Growth in underlying profitability driven by
higher fuel volume and opex optimization
1 | P ageADNOC Classification: Public
Key highlights: Strong operating performance and growth in
underlying profitability in Q1 2023
Fuel volumes – Q1 2023
3,143 +27.8% Y-o-Y
Retail fuel volumes: +29.7%, mainly attributable to acquisition of TotalEnergies Marketing Egypt
million liters
Commercial fuel volumes: +23.8%, mainly attributable to acquisition of TotalEnergies Marketing Egypt
2,654 +7.9% Y-o-Y
Retail fuel volumes: +5.5% supported by network expansion and growth in region’s ongoing economic
million liters
activities
sold in UAE
and KSA Commercial fuel volumes: +12.9% on a strong growth in the corporate business, new contracts signed
in 2022 and Q1 2023 as well as higher spot trading
Revenue – Q1 2023
7,998 +18.7% Y-o-Y
driven by growth in total fuel volumes and selling prices (as a result of higher crude oil prices) and higher
AED million non-fuel retail segment contribution
Gross profit – Q1 2023
1,264 -12.8% Y-o-Y
AED million
in Q1 22, ADNOC Distribution benefited from inventory gains in a rising oil price environment (AED 149
million), while in Q1 23 it recorded inventory losses (AED 14 million) due to falling international oil prices
804 Retail fuel: -8.7% Y-o-Y
AED million
inventory gains of AED 128 million in Q1 2022 vs. absence of inventory gains in Q1 2023 partially offset by
growth in retail fuel volumes
172 Non-fuel retail: +8.7% Y-o-Y
AED million
supported by strong growth in non-fuel transactions, higher conversion rate, improved customer offerings
following revitalization of stores, marketing and promotion campaigns, and higher Food and Beverage
(F&B) sales
288 Commercial: -29.8% Y-o-Y
AED million
growth in corporate fuel volumes offset by a margin reduction in a situation of declining prices as well as
inventory gains of AED 21 million in Q1 2022 vs. AED 14 million inventory losses in Q1 2023
EBITDA – Q1 2023
776 -11.9% Y-o-Y and +18.6% Q-o-Q
AED million
in Q1 22, ADNOC Distribution benefited from inventory gains in a rising oil price environment, while in Q1
23 it recorded inventory losses due to falling international oil prices
Underlying EBITDA (EBITDA excluding inventory movements) – Q1 2023
789 +7.8% Y-o-Y and +13.2% Q-o-Q
driven by volume growth, higher contribution from non-fuel retail business and company-wide efficiency
AED million
initiatives
Net profit attributable to equity holders – Q1 2023
537 -19.9% Y-o-Y and +28.1% Q-o-Q
AED million
due to lower EBITDA
Net profit excluding inventory movements – Q1 2023
551 +5.5% Y-o-Y and +19.4% Q-o-Q
AED million
driven by higher fuel volumes and company-wide efficiency initiatives
2 | P ageADNOC Classification: Public
Strong cash flow generation and balance sheet – Q1 2023
1,048 Free cash flow
AED million
Supports new dividend policy to pay min. AED 2.57 billion dividends for 2023
ADNOC Distribution maintained a strong financial position at the end of March 2023 with liquidity of AED 4.7
billion, in the form of AED 1.9 billion in cash and cash equivalents and AED 2.8 billion in unutilized credit
facility
1.06x Net debt to EBITDA ratio
Balance sheet remained strong with a Net debt to EBITDA ratio of 1.06x as of 31 March 2023
(0.78x as of 31 December 2022)
Operational highlights – Q1 2023
7 New stations in UAE and KSA 814 Total stations network
507 in UAE
67 in KSA
240 in Egypt*
345 Total convenience stores
network in UAE
42.5 Fuel transactions in UAE 10.6 Non-fuel transactions in UAE
flat Y-o-Y +10.7% Y-o-Y
million million
24% Conversion rate of
convenience stores in UAE
22% in Q1 2022
* Acquisition of 50% of TotalEnergies Marketing Egypt completed in Feb. 2023
3 | P ageADNOC Classification: Public
Strategy update: Sustained growth momentum in Q1 2023
following record 2022 results
ADNOC Distribution recorded positive underlying financial performance in Q1 2023 with net profit excluding
inventory movements increasing by 5.5% year-on-year to AED 551 million, driven by a 7.9% growth in the UAE
and KSA fuel volumes, a 9% increase in non-fuel retail gross profit, and like-for-like OPEX reduction of AED 33
million demonstrating significant progress towards the OPEX savings target. Continued execution momentum
on Smart Growth Strategy signals the Company’s commitment to delivering on its growth initiatives and
generating long-term shareholder value.
Fuel business (retail and commercial)
ADNOC Distribution’s UAE and KSA fuel volumes demonstrated strong growth in Q1 2023 of 7.9% year-on-
year, as economic activity continued to demonstrate robust momentum supporting retail and corporate fuel
consumption. The fuel volumes expanded year-on-year despite the start of Ramadan during the reporting period
and no positive impact of EXPO-2020 that we saw in Q1 2022. ADNOC Distribution added new stations in Dubai
and Saudi Arabia, resulting in incremental retail fuel volumes in Q1 2023 which increased by 5.5% compared to
Q1 2022. Finally, following completion of the acquisition of a 50% stake in TotalEnergies Marketing Egypt and
the subsequent financial consolidation, we recorded a 27.8% year-on-year increase in total fuel volumes and
added 240 retail stations to our network.
Network expansion: ADNOC Distribution further expanded its retail fuel activities by adding new stations in the
UAE and KSA and is on track to open 25-35 new stations in 2023.
o Domestically: ADNOC Distribution added six new stations in the UAE in Q1 2023 (one marine station in
Abu Dhabi was closed during the period) to reach 507 stations in our home market, which compares to 464
stations at the end of Q1 2022.
In Dubai, the Company opened one new station in Q1 2023. As a result, ADNOC Distribution’s service
station network in the emirate expanded to 40 stations at the end of the period, up from 31 stations at the
end of Q1 2022.
o Internationally: ADNOC Distribution continued to execute on its plans in the Kingdom of Saudi Arabia, with
one station opened during Q1 2023, taking its total network in the country to 67 stations at the end of the
period, up from 55 stations at the end of Q1 2022. The Company has revitalized and rebranded 76% of its
KSA stations as of the end of Q1 2023.
Beyond the GCC region, in Q1 2023 ADNOC Distribution successfully completed the acquisition of a 50%
stake in TotalEnergies Marketing Egypt LLC, which is among the top four fuel retail operators in Egypt.
The partnership with TotalEnergies, a leading global multi-energy company with a strong brand and
successful track record in Egypt, includes a diversified portfolio comprising 240 fuel retail stations, 100+
convenience stores, 250+ lube changing stations, and car wash sites, as well as wholesale fuel, aviation
fuel and lubricant operations.
The acquisition of TotalEnergies Marketing Egypt supports ADNOC Distribution’s objective to become a
regional leader in mobility retail and fuel distribution and provides sizeable operations in one of the largest
countries in MENA.
4 | P ageADNOC Classification: Public
Commercial business:
In Q1 2023, commercial segment fuel volumes in the UAE increased by 12.9% compared to Q1 2022 driven by
a material increase of 21.0% in corporate business volumes. This was a result of higher spot trading activity and
execution of new corporate contracts signed in 2022 and Q1 2023, as our business development team has been
proactively focusing on gaining market share in Dubai and Northern Emirates. The total number of export network
countries of ADNOC Distribution’s VOYAGER lubricants portfolio rose to 28 markets at the end of Q1 2023
compared to 20 markets at the end of the same period last year.
Non-fuel business - UAE
During Q1 2023, non-fuel business continued to gain momentum with a c.11% year-on-year increase in recorded
transactions, supported by a series of marketing campaigns and customer-centric initiatives in line with the
Company’s non-fuel retail strategy.
At the end of Q1 2023, the network of convenience stores stayed nearly unchanged compared to the end of Q1
2022 at 345. Our focus remains on revitalization of the convenience stores. Since the launch of the program, the
Company modernized a total of 193 ADNOC Oasis stores over 2020-2022, offering fresh food, barista-brewed
coffee and a wider menu selection, and providing support to key convenience stores operating metrics, including
number of transactions, conversion rate, gross margin, and gross basket.
ADNOC Distribution continued to enhance customer offerings through various initiatives, such as offering a
modern shopping environment, improvement in category management, a better assortment of products,
including introduction of fresh food and premium coffee products, and digital channels to order and transact. The
customer journey improvements are consistent with the Company’s ongoing non-fuel retail strategy to offer
modern and digitally enabled shopping experience.
ADNOC Distribution continued to expand its vehicle inspection services in the UAE with the addition of one new
center in Abu Dhabi. The number of vehicles inspected (fresh tests) in the Company’s vehicle inspection centers
increased by 33.3% in Q1 2023 year-on-year, partially driven by an increase of the number of vehicle inspection
centers from 30 as of the end of Q1 2022 to 33 as of the end of Q1 2023.
ADNOC Rewards loyalty program and customer focus
ADNOC Rewards loyalty program continued to add members throughout Q1 2023, with more than 1.6 million
members now enrolled and over 50 partner offers providing discounts and deals through the ADNOC Distribution
app. The program received a boost in February 2023 with an improvement in generosity of 3x and further
enhancements planned for 2023.
Customer experience has been integral to the Company, with continuing offering of promotions in-store and
through the ADNOC Rewards. This includes the Let’s Go Shop and Win Raffle, as well as comprehensive vehicle
inspection, car wash, and lube change offers.
In February, the Company became the region’s first fuel distributor to introduce the innovative ADNOC ‘Fill &
Go’ technology at its service stations. The AI-backed solution utilizes the latest innovations in computer vision
technologies, comprising machine learning models allowing computers to recognize vehicles and responds by
offering a hyper-personalized fueling experience, reaffirming ADNOC Distribution’s leadership position in the
UAE’s fuel and convenience retail sector.
5 | P ageADNOC Classification: Public
OPEX
During Q1 2023, ADNOC Distribution accelerated efficiency improvement measures across all our operations
and businesses including optimizing logistics costs, renegotiations of supply contracts with vendors,
centralization of key functions, etc. As a result, the Company’s OPEX decreased by 8.7% year-on-year and by
12.3% quarter-on-quarter.
The cost reduction took place despite the continued expansion of our operations and associated costs. Number
of stations in the UAE and KSA increased by nearly 11% at the end of Q1 2023 compared to the same period
of last year. In addition, ADNOC Distribution consolidated operations of TotalEnergies Marketing Egypt from 1
February 2023. The Company continues to implement management initiatives to increase operational efficiency
and achieve prudent cost controls.
CAPEX
In line with the plans to continue with its expansion strategy, ADNOC Distribution invested (including
accruals/provisions) AED 157 million in Q1 2023, of which nearly 80% spent on growth. Our target remains to
spend AED 0.9-1.1 billion ($ 250-300 million) on CAPEX in 2023.
Sustainability & futureproofing of business
ADNOC Distribution’s commitment to futureproof the business supports our drive to deliver long-term
shareholder value. During Abu Dhabi Sustainability Week in January 2023, the Company announced a series
of tangible steps to address energy transition as well as to decarbonize its operations through several initiatives:
I/ E GO
2
ADNOC Distribution continues to expand its network of EV charging stations, and has agreed with TAQA, one
of the largest listed integrated utility companies in the EMEA region, to work together to establish a new mobility
joint-venture, E GO. Once established, E GO will build and operate EV charging infrastructure in public and
2 2
private sites across Abu Dhabi and the wider UAE.
The two companies will utilize their wealth of experience, vast network, and innovation capabilities to meet the
evolving needs of EV customers nationwide and unlock new business revenue streams. E GO is to play a critical
2
role in delivering EV charging infrastructure across Abu Dhabi where an estimated 70,000 EV charging points
and up to nearly $200 million CAPEX is required to meet growing demand by 2030.
In parallel, ADD continues EV chargers rollout at its service stations with 36 charging points currently installed
across the UAE with a power ranging between 50 and 180 KW. 23 of our service stations are equipped with EV
charging services.
Through the development of modern mobility solutions, ADNOC Distribution intends to become a destination of
choice for charging and convenience for the UAE customers.
II/ Decarbonization roadmap
ADNOC Distribution plans to expand its sustainability-driven efforts to futureproof its business. In January 2023,
the Company unveiled its Decarbonization roadmap, committing to a reduction of carbon intensity of its business
by 25% by 2030. The Decarbonization roadmap covers Scope 1 emissions, which come directly from the
Company’s operations, and Scope 2 carbon emissions, which come from the energy ADNOC Distribution uses
to run its operations.
6 | P ageADNOC Classification: Public
The Company aims to cut emissions through a set of identified initiatives that will be implemented in 2023 and
beyond, such as installing solar panels at service stations, use of biofuels to power its fleet of vehicles and other
energy optimization initiatives. ADNOC Distribution also aims to utilize ‘green concrete’, that is eco-friendly and
has a smaller carbon footprint than traditional concrete, in the construction of new service stations.
In May, ADNOC Distribution announced partnering with Emerge, a joint venture between Masdar and EDF, to
install solar panels across its service station network in Dubai, as part of the Company’s phased approach to
UAE-wide solar rollout to provide the power needed for daily operations.
III/ Sustainability Linked Loan
ADNOC Distribution became the first UAE fuel and convenience retailer to tap into sustainable financing, by
converting in January 2023 an existing AED 5.5 billion ($ 1.5 billion) term loan into a Sustainability Linked Loan.
The Company committed to a penalty/incentive which ties the loan to sustainability-linked indicators, including
GHG emissions intensity and share of renewable energy contribution. By arranging the Sustainability Linked
Loan, ADNOC Distribution has aligned its funding strategy with the sustainability roadmap.
Eng. Bader Al Lamki – Chief Executive Officer:
"We focused our efforts during Q1 2023 on streamlining operations across our local and international network
while ensuring our cross-border teams were well-equipped to sustain the delivery momentum of our growth
trajectory through 2023 and beyond. At the same time, we maintained a healthy cash flow generation and strong
financial position to deliver incremental shareholder value through efficient capital allocation.
We continue to explore further growth of our business domestically and internationally through value-accretive
M&A opportunities, while considering profitability and the creation of new revenue streams to be among the main
driving factors in our decision-making process.”
7 | P ageADNOC Classification: Public
Outlook: Positive volume growth expected to sustain in 2023
with management focus on Growth and Profitability
ADNOC Distribution remains committed to delivering sustainable, profitable growth and attractive shareholder
returns. The Company expects positive volume growth to sustain in 2023, while also focusing on network
expansion and delivering higher non-fuel retail contribution. By executing management initiatives to increase
operational efficiency across all business units, implementing prudent cost controls and optimizing costs, in Q1
2023 the Company achieved OPEX savings of AED 33 million and is on track to achieve its guidance for like-
for-like OPEX savings in excess of AED 92 million in 2023.
ADNOC Distribution will continue to enhance customer experience, further optimize its operations to become a
leading cost-efficient fuel retailer and generate sustainable value for shareholders. The Company is confident
and steadfast in the delivery of its strategic commitments. As opportunities arise, ADNOC Distribution will pursue
expansion plans in a disciplined manner, supported by a robust balance sheet and ample liquidity with
confidence in the cash flow generation capability.
In its ongoing quest to futureproof its business, ADNOC Distribution continues to explore potential growth
opportunities and new revenue streams created through energy transition, including opportunities in mobility and
energy transition such as electric vehicle charging services and other sustainability-driven initiatives.
Fuel business
New stations: after achieving the 2022 target of opening 60-80 stations by adding 68 new stations in the UAE
and KSA, the Company expects delivery momentum to continue and targets 25-35 new stations during 2023. In
Q1 2023, ADNOC Distribution opened 7 new stations and operated at the end of the reporting period 574 service
stations in the UAE and KSA.
Egypt: ADNOC Distribution’s recent acquisition of a 50% stake in TotalEnergies Marketing Egypt reaffirms the
Company’s commitment to expanding business in attractive international growth markets. Egypt’s fuel retail,
lubricants and aviation markets are highly attractive with a potential for future growth. Due to its young and
expanding population, alongside a series of progressive economic reforms, Egypt has recorded GDP growth
with a positive outlook.
Through this transaction, ADNOC Distribution and TotalEnergies are expected to explore future growth
opportunities of TotalEnergies Marketing Egypt by unlocking value potential in fuel distribution, lubricants and
aviation businesses supported by economic growth. The Company plans to open the first ADNOC flagship
service station in Cairo during Q2 2023.
Other international: Beyond our successful acquisition in Egypt, the Company is evaluating inorganic growth
opportunities in international markets with a focus on efficient capital allocation towards growth.
Renewal of the Refined Products Supply Agreement: at the beginning of 2023, ADNOC Distribution
successfully renewed its supply agreement with ADNOC for a new five-year term, reaffirming the Company’s
strong value proposition driven by predictable margins and highly cash generative core business. The renewal
also demonstrated strong and ongoing support from the majority shareholder, ADNOC.
8 | P ageADNOC Classification: Public
Non-fuel business
ADNOC Distribution invests in offering customers a modern and engaging retail experience. In line with the
ambitious non-fuel strategy, the focus remains on offering a modern environment and a better assortment of
products to customers, including fresh food and premium coffee, bundle offers and digital channels to order and
transact.
The convenience store revitalization program has ensured that the Company is well-positioned to capitalize on
benefits of its customer-centric initiatives and generates consistent growth in its convenience stores business.
Efficient capital allocation
ADNOC Distribution has demonstrated a proven track record of value creation since IPO, by pursuing new
opportunities in domestic and international markets and allocating cash towards growth. The Company expects
to invest AED 0.9-1.1 billion in 2023 to deliver on its growth plans after investing AED 1.25 billion in 2022, of
which nearly 65% was spent on growth. The guidance does not include any potential M&A opportunities. In Q1
2023, the CAPEX amounted to AED 157 million.
Through efficient capital allocation, ADNOC Distribution has consistently achieved healthy rates of return,
including Return on Capital Employed (ROCE) of 28.3% in Q1 2023 (26.6% in Q1 2022) and Return on Equity
(ROE) of 97.0% in Q1 2023 (87.5% in Q1 2022).
In Q1 2023, ADNOC Distribution generated robust free cash flow of AED 1,048 million. At the end of March
2023, the Company maintained a strong financial position with liquidity of AED 4.7 billion, in the form of AED 1.9
billion in cash and cash equivalents and AED 2.8 billion in unutilized credit facility. The balance sheet remained
strong with a net debt to EBITDA ratio of 1.06x as of 31 March 2023 (0.78x as of 31 December 2022). Together
with the consistent cash generation this provides support to potential future international expansion through
value-accretive M&A transactions.
Operating and investment efficiency
ADNOC Distribution aims to become one of the leading cost-efficient fuel retailers and remains on track to take
structural costs out, make its operations leaner and more efficient. The Company remains committed to
achieving further operational excellence and expects to realize like-for-like OPEX savings in excess of AED 92
million ($ 25 million) in 2023.
The key drivers for further OPEX savings include staff optimization, with the more efficient deployment of staffing
levels for stations and convenience stores, energy efficiency through smart technology, outsourcing of logistics,
centralization of key functions, etc.
Dividend policy
The Company’s continued growth and robust cash generation have enabled a progressive dividend policy for
the shareholders. ADNOC Distribution is committed to delivering sustainable, profitable growth and attractive
shareholder returns.
In March 2023, ADNOC Distribution shareholders approved a new attractive dividend policy with a minimum
dividend of AED 2.57 billion (20.57 fils per share) for 2023 (compared to a minimum 75% of distributable profits
as per the previous policy), offering higher payback visibility for shareholders for another year. For years
thereafter, the dividend is set equal to at least 75% of distributable profits. The dividend policy recognizes the
Company’s strong financial position, confidence in its growth prospects and cash-flow generation ability going
forward.
In accordance with the dividend policy, the Company expects to continue to pay half of the annual dividend in
October of the relevant year and the second half to be paid in April of the following year. The payment of dividend
is subject to the discretion of ADNOC Distribution’s Board of Directors and to the shareholders’ approval.
9 | P ageADNOC Classification: Public
Financial summary
AED million Q1-23 Q4-22 QoQ % Q1-22 YoY %
Revenue 7,998 8,187 -2.3% 6,736 18.7%
Gross profit 1,264 1,225 3.2% 1,449 -12.8%
Gross margin, % 15.8% 15.0% 21.5%
EBITDA 776 654 18.6% 881 -11.9%
EBITDA margin, % 9.7% 8.0% 13.1%
Underlying EBITDA (1) (2) 789 697 13.2% 732 7.8%
Operating profit 626 499 25.5% 718 -12.9%
Net profit attributable to equity holders 537 419 28.1% 671 -19.9%
Net margin, % 6.7% 5.1% 10.0%
Earnings per share (AED/share) 0.04 0.03 28.1% 0.05 -19.9%
Net profit excluding inventory movements 551 461 19.4% 522 5.5%
Net cash generated from operating activities 1,257 1,522 -17.4% 2,066 -39.2%
Capital expenditures 155 490 -68.4% 196 -20.6%
Free cash flow (3) 1,048 1,142 -8.2% 1,866 -43.9%
Total equity 2,793 3,445 -18.9% 2,620 6.6%
Net debt (4) 3,605 2,735 31.8% 1,446 149.3%
Capital employed 10,176 10,441 -2.5% 9,305 9.4%
Return on capital employed (ROCE), % 28.3% 28.5% 26.6%
Return on equity (ROE), % 97.0% 79.8% 87.5%
Net debt to EBITDA ratio (4) 1.06 0.78 0.46
Leverage ratio, % 56.3% 44.3% 35.6%
(1) Underlying EBITDA is defined as EBITDA excluding inventory movements
(2) Underlying EBITDA for Q4 2022 and Q1 2022 has been restated as per definition in (1)
(3) Free cash flow is defined as net cash generated from operating activities less payments for purchase of property, plant & equipment,
and advances to contractors
(4) Cash and bank balances used for net debt calculation include term deposits with banks
Notes: See the Glossary for the calculation of certain metrics referred to above
10 | P ageADNOC Classification: Public
Operating and financial review
Fuel volumes
Q1 2023 total fuel volumes sold reached 3,143 increased by 12.9% year-on-year driven by a
million liters, increasing by 27.8% year-on-year significant growth of 21.0% in corporate volumes,
mainly attributable to acquisition of TotalEnergies partially offset by a reduction of 51.3% year-on-year
Marketing Egypt. in aviation volumes due to lower uptake from
strategic aviation customers.
In GCC markets (UAE and KSA), Q1 2023 total fuel
volumes amounted to 2,654 million liters, up by Compared to Q4 2022, Q1 2023 GCC total fuel
7.9% year-on-year despite start of Ramadan during volumes were almost flat, including unchanged
the reporting period and no effect of EXPO-2020 quarter-on-quarter retail fuel volumes. However,
which had a positive impact on our volumes in Q1 daily Q1 2023 total fuel volumes increased by 1.8%
2022. quarter-on-quarter, including by 2.2% in retail
segment and by 1.1% in commercial segment, as
In Q1 2023, GCC retail fuel volumes increased by Q1 2023 had two days less than Q4 2022.
5.5% year-on-year, while commercial fuel volumes
Fuel volumes by segment (million liters) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Retail (B2C) 2,148 1,747 23.0% 1,656 29.7%
Of which GCC 1,746 1,747 0.0% 1,656 5.5%
Of which Egypt 402
Commercial (B2B) 995 918 8.4% 804 23.8%
Of which GCC 907 918 -1.1% 804 12.9%
Of which Egypt 88
Of which Corporate 926 868 6.6% 713 29.7%
Of which GCC 863 868 -0.5% 713 21.0%
Of which Egypt 62
Of which Aviation 70 50 39.7% 90 -22.9%
Of which GCC 44 50 -11.7% 90 -51.3%
Of which Egypt 26
Total 3,143 2,664 18.0% 2,459 27.8%
Fuel volumes by product (million liters) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Gasoline (1) 1,773 1,612 10.0% 1,525 16.3%
Diesel 1,081 832 29.8% 656 64.7%
Aviation products 70 50 39.7% 90 -22.9%
Others (2) 220 170 29.3% 188 17.0%
Total 3,143 2,664 18.0% 2,459 27.8%
Of which GCC 2,654 2,664 -0.4% 2,459 7.9%
Of which Egypt 490
(1) Includes grade 91, 95 and 98 unleaded gasoline
(2) Includes CNG, LPG, kerosene, lubricants, and base oil
11 | P ageADNOC Classification: Public
Results
In Q1 2023, revenue increased by 18.7% year-on- Reported EBITDA declined by 11.9% year-on-year
year to AED 7,998 million. The increase was driven to AED 776 million mainly due inventory gains in Q1
by higher selling prices as a result of higher crude 2022 and inventory losses in Q1 2023. This was
oil prices, growth in fuel volumes, and higher partially offset by the higher fuel volumes and a
contribution of non-fuel retail business. reduction in cash operating expenses.
Q1 2023 gross profit decreased by 12.8% year-on- Q1 2023 underlying EBITDA (EBITDA excluding
year to AED 1,264 million. In Q1 2022, inventory inventory movements) increased by 7.8% year-on-
gains amounted to AED 149 million (AED128 million year to AED 789 million driven by higher volumes
in fuel retail and AED 21 million in Corporate and management initiatives to reduce costs and
business), while in the reporting period, the improve efficiency of operations.
Company did not record any inventory gains in the
fuel retail business and incurred AED 14 million Q1 2023 net profit attributable to shareholders
inventory losses in the Commercial business. In Q1 decreased by 19.9% year-on-year to AED 537
2023, gross profit received support from higher fuel million due to lower EBITDA. Net profit attributable
volumes and growth in non-fuel retail business. to shareholders excluding inventory movements
increased by 5.5% year-on-year to AED 551 million.
Revenue by segment (AED million) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Retail (B2C) 5,260 5,297 -0.7% 4,600 14.3%
Of which fuel retail 4,937 4,985 -1.0% 4,316 14.4%
Of which non-fuel retail (1) 323 312 3.4% 284 13.5%
Commercial (B2B) 2,739 2,890 -5.2% 2,136 28.2%
Of which corporate 2,430 2,630 -7.6% 1,820 33.5%
Of which aviation 308 259 19.0% 316 -2.4%
Total 7,998 8,187 -2.3% 6,736 18.7%
Gross profit by segment (AED million) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Retail (B2C) 976 928 5.2% 1,039 -6.1%
Of which fuel retail 804 766 4.9% 881 -8.7%
Of which non-fuel retail (1) 172 162 6.7% 159 8.7%
Commercial (B2B) 288 298 -3.4% 410 -29.8%
Of which corporate 232 227 1.9% 292 -20.6%
Of which aviation 56 70 -20.4% 118 -52.6%
Total 1,264 1,225 3.2% 1,449 -12.8%
EBITDA by segment (AED million) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Retail (B2C) 545 399 36.6% 598 -9.0%
Commercial (B2B) 222 255 -12.8% 282 -21.3%
Of which corporate 168 191 -12.0% 232 -27.4%
Of which aviation 54 64 -15.3% 50 6.8%
Unallocated(2) 9 1 NM 1 NM
Total 776 654 18.6% 881 -11.9%
NM: Not meaningful
(1) Non-fuel retail includes convenience stores, car wash, lube change, property management and vehicle inspection
(2) Unallocated includes other operating income/expenses not allocated to specific segment
12 | P ageADNOC Classification: Public
Distribution and administrative expenses
In Q1 2023, distribution and administrative
expenses were AED 669 million, a reduction of Excluding depreciation, the OPEX of AED 519
8.7% compared to Q1 2022, despite an increase of million decreased in Q1 2023 by 9.0% year-on-year.
nearly 11% in the Company’s network in the UAE
and KSA and associated costs as well as acquisition
of TotalEnergies Marketing Egypt.
AED million Q1-23 Q4-22 QoQ % Q1-22 YoY %
Staff costs 361 380 -5.2% 393 -8.3%
Depreciation 150 156 -3.5% 163 -7.6%
Repairs, maintenance, and consumables 44 62 -29.2% 46 -5.0%
Distribution and marketing expenses 4 9 -51.9% 29 -85.0%
Utilities 34 57 -40.5% 40 -16.4%
Insurance 5 5 1.7% 4 22.8%
Others (1) 71 94 -24.5% 57 24.8%
Total 669 763 -12.3% 733 -8.7%
(1) Other costs include lease cost, bank charges, subscriptions, legal fees, consultancies, etc.
Capital expenditures
The Company’s capital expenditures (CAPEX) In Q1 2023, total CAPEX decreased by 19.7% to
primarily consist of (i) investments related to the AED 157 million mainly due to normalization of the
development and construction of new service investment activity following the post-COVID
stations and fuel terminal projects and capitalized acceleration seen during 2022. Nearly 80% of the
maintenance costs related to properties, (ii) the CAPEX comprised development and construction of
purchase of machinery and equipment, and (iii) new service stations.
other capital expenditures related to properties,
including structural upgrades, technology The table below presents the breakdown of capital
infrastructure upgrades and other improvements. expenditures for the reviewed period.
AED million Q1-23 Q4-22 QoQ % Q1-22 YoY %
Service stations projects 122 277 -56.0% 128 -4.4%
Industrial and other projects 8 57 -86.1% 37 -78.4%
Machinery and equipment 13 76 -82.4% 10 28.8%
Distribution fleet 0 4 NM 3 NM
Technology infrastructure 12 60 -80.8% 16 -26.9%
Office furniture and equipment 2 17 -86.2% 2 8.6%
Total 157 490 -68.0% 196 -19.7%
NM: Not meaningful
13 | P ageADNOC Classification: Public
Business segments operating review
Retail segment – B2C (fuel and non-fuel)
Volumes
In Q1 2023, retail fuel volumes increased by 29.7% remained flat compared to Q4 2022 but on a daily
year-on-year, mainly attributable to acquisition of basis increased by 2.2% quarter-on-quarter.
TotalEnergies Marketing Egypt.
The Company continued to expand in Saudi Arabia
In GCC markets (UAE and KSA), the volumes and Dubai by adding new stations, resulting in
increased by 5.5% year-on-year driven by the incremental fuel volumes in Q1 2023 compared to
region’s ongoing economic growth. The volumes the same period of 2022.
Retail segment volumes (million liters) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Gasoline 1,701 1,536 10.8% 1,461 16.4%
Diesel 389 155 150.6% 144 170.0%
Other (1) 58 55 5.2% 51 15.3%
Total 2,148 1,747 23.0% 1,656 29.7%
Of which GCC 1,746 1,747 0.0% 1,656 5.5%
Of which Egypt 402
(1) Includes CNG, LPG, kerosene, and lubricants
Results
In Q1 2023, retail segment revenue increased by 2022 and absence of inventory gains in Q1 2023,
14.3% compared to Q1 2022, driven by higher partially offset by the higher fuel volumes in the
volumes and prices in the fuel retail segment, as reporting period. Non-fuel retail gross profit
well as growth in non-fuel retail revenue. increased by 8.7% in Q1 2023 compared to Q1
2022.
Q1 2023 retail segment gross profit decreased by
6.1% compared to Q1 2022, due to inventory gains Q1 2023 retail segment EBITDA declined by 9.0%
of AED 128 million in Q1 2022 and absence of compared to Q1 2022, mainly due to inventory gains
inventory gains in the reporting period. Gross profit in Q1 2022 and absence of inventory gains in Q1
was supported by higher fuel volumes and higher 2023, partially offset by the higher fuel volumes and
non-fuel business contribution. lower operating expenses in the reporting period.
Retail segment underlying EBITDA (EBITDA
Fuel retail segment gross profit decreased by 8.7% excluding inventory movements) increased by
year-on-year principally due to inventory gains in Q1 15.8% year-on-year.
Retail segment (AED million) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Revenue 5,260 5,297 -0.7% 4,600 14.3%
Of which fuel retail 4,937 4,985 -1.0% 4,316 14.4%
Of which non-fuel retail (1) 323 312 3.4% 284 13.5%
Gross profit 976 928 5.2% 1,039 -6.1%
Of which fuel retail 804 766 4.9% 881 -8.7%
Of which non-fuel retail (1) 172 162 6.7% 159 8.7%
EBITDA 545 399 36.6% 598 -9.0%
Operating profit 408 255 59.9% 450 -9.3%
Capital expenditures 99 347 -71.6% 129 -23.8%
(1) Non-fuel retail includes convenience stores, car wash, lube change, property management and vehicle inspection
14 | P ageADNOC Classification: Public
Other operating metrics
Q1 2023 fuel transactions in the UAE were nearly Q1 2022. The number of fuel transactions was
unchanged year-on-year despite the start of supported by the network expansion, improving
Ramadan and no effect of EXPO-2020 which had a customer sentiment, as well as the ongoing growth
positive impact on the number of fuel transactions in in economic activity in the UAE.
Fuel operating metrics Q1-23 Q4-22 QoQ % Q1-22 YoY %
Number of service stations – UAE(1)(2) 507 502 1.0% 464 9.3%
Number of service stations – Saudi Arabia(1) 67 66 1.5% 55 21.8%
Number of service stations – Egypt(1) 240
Total number of service stations(1) 814 568 43.3% 519 56.8%
Throughput per station – GCC (million liters) 3.0 3.1 -1.1% 3.2 -4.6%
Number of fuel transactions – UAE (million) 42.5 44.3 -4.0% 42.7 -0.4%
(1) At end of period
(2) One marine station was closed Q1 2023
In Q1 2023, non-fuel transactions in the UAE Average gross basket size increased by 2.5% year-
increased by 10.7% year-on-year driven by on-year in Q1 2023 compared to Q1 2022.
improving consumer sentiment, enhanced customer
offerings following the revitalization of the stores, and In its property management business, the Company
marketing and promotion campaigns under ADNOC continues to transition its tenancy business to a
Rewards loyalty program to attract higher footfall and revenue-sharing model to maximize revenues and
increase customer spending. profitability. In Q1 2023, the number of occupied
properties increased by 2.4% year-on-year driven by
The UAE convenience stores revenue increased by proactive non-fuel growth strategy to bring in new
11.6% to AED 201 million in Q1 2023 compared to tenants.
Q1 2022, mainly driven by higher number of
transactions compared to the same period of last A number of vehicles inspected (fresh tests) in the
year. In Q1 2023, convenience stores gross profit Company’s vehicle inspection centers increased by
increased by 11.7% to AED 66 million, driven by 33.3% in Q1 2023 compared to Q1 2022, driven by
higher number of transactions as a result of a higher number of vehicle inspection centers.
enhanced customer offerings following revitalization
of the stores, marketing, and promotion campaigns
as well as the higher F&B sales.
15 | P ageADNOC Classification: Public
Non-fuel operating metrics – UAE Q1-23 Q4-22 QoQ % Q1-22 YoY %
Total number of non-fuel transactions (million)(1) 10.6 10.8 -2.2% 9.6 10.7%
Number of convenience stores – UAE(2) 345 362 -4.7% 350 -1.4%
Convenience stores revenue (AED million) 201 207 -2.7% 180 11.6%
Convenience stores gross profit (AED million) 66 64 3.2% 59 11.7%
Gross margin, % 32.9% 31.0% 32.9%
Conversion rate (C-store sites only), %(3) 24% 24% 22%
Average basket size (AED)(4) 22.5 22.5 -0.2% 22.4 0.2%
Average gross basket size (AED)(5) 26.9 26.3 2.5% 26.3 2.5%
Number of Property Management tenants(2) 305 315 -3.2% 330 -7.6%
Number of occupied properties for rent(2) 997 1,022 -2.4% 974 2.4%
Number of vehicle inspection centers(2)(6) 33 32 3.1% 30 10.0%
Number of vehicles inspected – fresh tests (thousands) 297 223 33.3% 223 33.3%
Other vehicle inspection transactions (thousands)(7) 54 88 -38.6% 85 -36.2%
(1) Includes convenience stores, car wash and oil change transactions
(2) At end of period
(3) Number of convenience stores transactions divided by number of fuel transactions at sites with convenience stores
(4) Average basket size is calculated as convenience store revenue divided by number of convenience store transactions
(5) Average gross basket size is calculated as convenience store revenue (including revenue from consignment items shown under other
operating income) divided by number of convenience store transactions
(6) Includes one permitting center
(7) Other vehicle inspection transactions include number of vehicles inspected (re-tests) and sale of safety items at vehicles inspection
centers
16 | P ageADNOC Classification: Public
Commercial segment – B2B (corporate and aviation)
Volumes
In Q1 2023, commercial fuel volumes increased by corporate volumes as a result of higher spot trading
23.8% year-on-year, mainly attributable to activity and execution of new corporate contracts
acquisition of TotalEnergies Marketing Egypt. signed in 2022 and Q1 2023. The increase in
Corporate volumes was partially offset by a 51.3%
In GCC markets (UAE and KSA), the volumes year-on-year decline in the aviation fuel volumes
increased by 12.9% compared to Q1 2022, driven sold to strategic customers.
by a significant increase of 21.0% year-on-year in
Commercial segment volumes (million liters) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Gasoline 72 76 -5.1% 64 13.0%
Diesel 691 677 2.1% 512 35.1%
Aviation 70 50 39.7% 90 -22.9%
Other (1) 162 115 41.0% 138 17.6%
Total 995 918 8.4% 804 23.8%
Of which GCC 907 918 -1.1% 804 12.9%
Of which Egypt 88
(1) Includes LPG, lubricants, and base oil
Results
Q1 2023 commercial segment revenue increased strategic customers and a reduction in margins. In
by 28.2% compared to Q1 2022, mainly attributable addition, in its corporate business ADNOC
to acquisition of TotalEnergies Marketing Egypt. Distribution recorded AED 21 million inventory gains
The growth was driven by corporate business which in Q1 2022 and incurred AED 14 million inventory
increased the revenue by 33.5% in Q1 2023 losses in Q1 2023.
compared to Q1 2022, on the back of higher selling
prices as a result of increase in crude oil prices and Q1 2023 commercial segment EBITDA declined by
the material growth in corporate volumes. 21.3% year-on-year, due to the gross profit
reduction. Commercial segment underlying EBITDA
Q1 2023 commercial segment gross profit declined (EBITDA excluding inventory movements)
by 29.8% year-on-year as a result of a significant decreased by 9.5% year-on-year.
decline in the aviation business fuel volumes sold to
Commercial segment (AED million) Q1-23 Q4-22 QoQ % Q1-22 YoY %
Revenue 2,739 2,890 -5.2% 2,136 28.2%
Of which corporate 2,430 2,630 -7.6% 1,820 33.5%
Of which aviation 308 259 19.0% 316 -2.4%
Gross profit 288 298 -3.4% 410 -29.8%
Of which corporate 232 227 1.9% 292 -20.6%
Of which aviation 56 70 -20.4% 118 -52.6%
EBITDA 222 255 -12.8% 282 -21.3%
Of which corporate 168 191 -12.0% 232 -27.4%
Of which aviation 54 64 -15.3% 50 6.8%
Operating profit 208 243 -14.3% 267 -22.2%
Capital expenditures 10 16 -37.6% 3 239.6%
17 | P ageAADDNNOOCC CCllaassssiiffiiccaattiioonn:: PPuubblliicc
Share trading and ownership
ADNOC Distribution shares are traded on the Abu An average of 10.4 million shares traded daily in Q1
Dhabi Securities Exchange (ADX) under the symbol 2023 (0.8x 2022 level). In Q1 2023, the average
ADNOCDIST. The closing share price as of 31 daily traded value of the Company’s shares was
March 2023 was AED 4.18. In the period from 1 approximately AED 45.5 million (0.9x 2022 level).
January 2023 through 31 March 2023, the share
As of 31 March 2023, ADNOC owned 77%, while
price ranged between AED 4.12 and AED 4.64 at
23% of ADNOC Distribution outstanding shares
close. ADNOC Distribution market capitalization
were publicly owned by institutional and retail
was AED 52.3 billion as of 31 March 2023.
investors.
Potential risks
Key risks potentially affecting ADNOC Distribution’s exposure to these risks. For more detailed
financial and operational results include supply information on risks and risk management, please
chain risks, asset integrity and information refer to the Risk Factors section of the international
technology risks. The Company has identified and offering memorandum dated 26 November 2017
implemented several key controls and mitigation relating to ADNOC Distribution IPO, which is
strategies to ensure business continuity, including available on the Company’s website at
engineered controls and managed controls as well www.adnocdistribution.ae
as contractual safeguards to limit its financial
18 | P ageADNOC Classification: Public
Q1 2023 Earnings conference call details
A conference call in English for investors and analysts will be held on Monday, May 15, 2023, at 4 p.m. UAE /
12 p.m. London / 8 a.m. New York. To access the management presentation, followed by a Q&A session, please
connect through one of the following methods:
Webcast
Click here to join the webcast
Please note that participants joining by webcast will be able to ask questions via a chat box within the webcast
player
Note: Click on the link above to attend the presentation from your laptop, tablet, or mobile device. Audio will
stream through your selected device. If you have technical difficulties, please click the “Listen by Phone” button
on the webcast player and dial one of the numbers provided therein.
Audio Call Dial in Details:
UAE (Toll Free): 8000 3570 2606
KSA (Toll Free): 800 844 5726
UK (Toll Free): 0800 279 0424
US (Toll Free): 800-289-0462
Passcode: 100965
For other countries, please connect to the above webcast link, select the “Listen by Phone” option on the webcast
player and click on the audio numbers to access the dial in information
The presentation materials will be available for download in English on Monday, May 12, 2023 at
https://www.adnocdistribution.ae/en/investor-relations/investor-relations/downloads/
Reporting date for the Q2 2023
We expect to announce our second quarter 2023 results on or around August 10, 2023.
Contacts
Investor Relations
Tel.: +971 2 695 9770
Email: ir@adnocdistribution.ae
Athmane Benzerroug
Chief Strategy, Sustainability and Transformation Officer
Email: athmane.benzerroug@adnocdistribution.ae
May 12, 2023
ABU DHABI NATIONAL OIL COMPANY FOR DISTRIBUTION PJSC
19 | P ageADNOC Classification: Public
Glossary
▪ Net debt is calculated as total interest bearing debt less cash and bank balances (including term deposits
with banks).
▪ Free cash flow is calculated as net cash generated from operating activities less payments for purchase
of property, plant & equipment, and advances to contractors.
▪ Capital employed is calculated as the sum of total assets minus non-interest bearing current liabilities.
▪ Return on capital employed is calculated as operating profit for the twelve months ended divided by
capital employed on the last day of the period presented.
▪ Return on equity is calculated as profit distributable to equity holders of the Company for the period of
twelve months ended divided by equity attributable to owners of the Company on the last day of the
period presented.
▪ Net debt to EBITDA ratio is calculated interest bearing net debt as of the end of the period presented,
divided by EBITDA for the twelve months ended on the last day of the period presented.
▪ Leverage ratio is calculated as (a) interest bearing net debt, divided by (b) the sum of interest bearing
net debt plus total equity.
▪ Average basket size is calculated as convenience store revenue divided by number of convenience
store transactions
▪ Average gross basket size is calculated as total convenience store sales revenue (including revenue
from consignment items shown under other operating income) divided by number of convenience store
transactions.
20 | P ageADNOC Classification: Public
Cautionary statement regarding forward-looking statements
This communication includes forward-looking statements which relate to, among other things, our plans,
objectives, goals, strategies, future operational performance, and anticipated developments in markets in which
operate and in which we may operate in the future. These forward-looking statements involve known and
unknown risks and uncertainties, many of which are beyond our control and all of which are based on
management’s current beliefs and expectations about future events. Forward-looking statements are sometimes
identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “could”, “should”,
“would”, “intends”, “estimates”, “plans”, “targets”, or “anticipates” or the negative thereof, or other comparable
terminology. These forward-looking statements and other statements contained in this communication regarding
matters that are not historical facts involve predictions and are based on the beliefs of our management, as well
as the assumptions made by, and information currently available to, our management. Although we believe that
the expectations reflected in such forward looking statements are reasonable at this time, we cannot assure you
that such expectations will prove to be correct. Given these uncertainties, you are cautioned not to place undue
reliance on such forward looking statements. Important factors that could cause actual results to differ materially
from our expectations include, but are not limited to: our reliance on ADNOC to supply us with substantially all
of the fuel products that we sell; an interruption in the supply of fuels to us by ADNOC; changes in the prices
that we pay ADNOC for our fuels and to the prices that we are allowed to charge our retail customers in the
UAE; failure to successfully implement our operating initiatives and growth plans, including our mixed-mode
service offering, our convenience store optimization initiatives, our cost savings initiatives, and our growth plans;
competition in our markets; decrease in demand for the fuels we sell, including due to general economic
conditions, improvements in fuel efficiency and increased consumer preference for alternative fuels; the dangers
inherent in the storage and transportation of the products we sell; our reliance on information technology to
manage our business; laws and regulations pertaining to environmental protection, operational safety, and
product quality; the extent of our related party transactions with ADNOC and our reliance on ADNOC to operate
our business; the introduction of VAT and other new taxes in the UAE; failure to successfully implement new
policies, practices, systems and controls that we implemented in connection with or following our IPO; any
inadequacy of our insurance to cover losses that we may suffer; general economic, financial and political
conditions in Abu Dhabi and elsewhere in the UAE; instability and unrest in regions in which we operate; the
introduction of new laws and regulations in Abu Dhabi and the UAE; and other risks and uncertainties detailed
in our International Offering Memorandum dated 26 November 2017 relating to our initial public offering and the
listing of our shares on the Abu Dhabi Securities Exchange, and from time to time in our other investor
communications. Except as expressly required by law, we disclaim any intent or obligation to update or revise
these forward-looking statements.
21 | P age

Sentiment: positive