ADNOC Logistics & Services revenues reach $840 million in 3 months

ADNOC Logistics & Services, the Abu Dhabi-listed logistics and maritime services company, has announced its financial results for the first quarter of 2024.

The company said in a statement on the Abu Dhabi Securities Exchange, which Sky News Arabia reviewed, that it achieved net profits of 712 million dirhams (about 194 million dollars) during the first quarter of 2024, or 0.10 dirhams ($0.03) per share, indicating an increase of 34 percent compared to the net profit of 533 million dirhams ($145 million) in the first quarter of 2023.

ADNOC Logistics & Services reported revenues of AED 3.085 billion (approximately $840 million) in the first quarter of 2024, an increase of 42 percent compared to the same period in 2023.

EBITDA increased by 44 per cent to AED 1.05 billion ($286 million) over the same period, driven by continued strong performance across all business segments. Based on these strong results and excellent financial performance across all business segments, the company has revised its financial outlook upwards.

ADNOC Logistics & Services’ ambitious transformational growth strategy has supported this strong financial performance. The company aims to invest over AED 18.4 billion ($5 billion) in value-added investments in energy-related maritime logistics over the medium term, to meet growing demand within the UAE and beyond.

Commenting on the company’s results, Captain Abdulkareem Al Masabi, CEO of ADNOC L&S, said: “ADNOC L&S has started 2024 with strong financial results, building on our record public listing and strong growth in 2023. The continued and significant increases in net profit and revenue clearly demonstrate the success of our transformational growth strategy. We continue to expand our market-leading fleet, enhance our geographic reach and services, and grow our global customer base to deliver increased value for our shareholders. Looking ahead, the company remains committed to deploying over $5 billion of value-accretive growth investments over the medium term, leveraging AI technologies to support our operational efficiency, safety and sustainability objectives.”

Financial performance of business sectors during the first quarter of 2024

In the first quarter of 2024, the integrated logistics sector witnessed an increase in revenues, reaching AED 2.005 billion ($546 million), recording an increase of 55 percent compared to the first quarter of 2023.

This exceptional performance is attributed to continued revenue growth, with an increase in business volumes across various sectors, in the number of self-elevating and moving support platforms, a rise in service prices and platform utilization, in addition to the expansion of integrated logistics activities and owned fleet, and new commercial activities such as engineering, procurement and construction. EBITDA also increased by 59 per cent to reach AED 588 million (US$ 160 million) during the same period.

Shipping revenues increased by 25 per cent to AED 922 million ($251 million) during the same period, driven by strong charter rates for oil and gas tankers, dry bulk and containers, as well as gains from the addition of four very large crude carriers to the fleet.

However, this increase was slightly negatively impacted by lower gas carrier profits due to lower leasing activity and LNG carrier charter rates compared to Q1 2023.

EBITDA also increased by 37 per cent to AED 419 million ($114 million) during the same period, expanding the EBITDA margin by 4 percentage points to 45 per cent.

On the other hand, the marine services sector recorded a 7 percent growth in revenues to AED 158 million ($43 million). This resulted in an EBITDA of AED 37 million ($10 million), an increase of 28 percent, driven by higher petroleum port operations volumes and the implementation of the marine terminal operations contract with ADNOC Offshore.

Technology and adoption of artificial intelligence

ADNOC Logistics & Services continued to deliver on its transformational growth strategy in Q1 2024, leveraging AI technologies to improve operational efficiencies and the safety of its people and assets.

In 2023, the company is ramping up its use of Smart Ship, a predictive maintenance solution that uses AI technologies to improve planning, analyze the operational efficiency of ocean-going vessels and maximize their effectiveness.

On the other hand, the Smart Vessel system, which is currently implemented on more than 80 vessels, enhances maritime health and safety standards by contributing to the safety of seafarers and proactively preventing damage and injuries. These AI systems have played a crucial role in the company’s pioneering success in the field of health, safety and environment, contributing to reducing the carbon emissions intensity of fleet operations by 30 percent since 2020, and the frequency of lost time incidents by 71 percent between 2018 and 2023.

Sustainability and decarbonization

ADNOC L&S’ sustainability goals reflect the company’s ongoing commitment to supporting and protecting the UAE’s marine ecosystems. The company seeks to accelerate sustainability initiatives in line with ADNOC Group’s sustainability plan to achieve climate neutrality by 2045, the UAE’s Climate Neutrality Strategy 2050, and the International Maritime Organization’s 2050 target to reduce carbon dioxide emissions by at least 40 percent by 2030.

ADNOC L&S continues to make significant strides, improving energy efficiency by 24 per cent across its shipping fleet since 2020, allocating nearly AED 7 billion ($2 billion) to build more eco-efficient vessels, and operating 13 vessels on biofuel since 2020.

Cash dividend distribution

ADNOC L&S remains committed to delivering sustainable, profitable growth and attractive returns for shareholders. In line with its approved dividend policy, shareholders at the Annual General Meeting approved a cash dividend of AED 477 million ($130 million), equivalent to 6.45 fils per share, for the second half of 2023.

Total dividends for the second quarter and second half of 2023 amounted to AED 716 million ($195 million), equivalent to 9.68 fils per share. The dividend of AED 239 million ($65 million) for the second quarter of 2023 was paid in November last year. The dividend for the second half of 2023 is expected to be paid in May 2024.

Under the progressive dividend policy approved by the Board of Directors, the company aims to increase annual profits by at least 5 percent over the medium term, based on annual profits for 2023 (AED 955 million or $260 million).

Future outlook

The company raised its forecast for 2024:

• Group Revenue: We have revised our 2024 revenue growth forecast up to the low 30 percent range (previously in double digits). In the medium term, we expect to achieve high single digit year-on-year growth (previously in mid-to-high single digits).
• Group EBITDA: We expect EBITDA growth to be in the low 30% range in 2024. Over the medium term, we target average annual EBITDA growth of 20% (previously low 10%).
• Group Net Income: We expect net income growth to be in the low 20% range in 2024. In the medium term, we target average annual growth in group net income in the low double digit range.
• Capital Structure: We aim to maintain a net debt to operating profit ratio of between 2.0 and 2.5 times over the medium term, with debt and free cash flow after dividends funding growth investments.