ADNOC L&S reports 327% increase in net profit for H1 2023

ADNOC Logistics and Services (ADNOC L&S), announced its financial results for the first half of 2023 (H1 2023). This is the global energy maritime logistics firm’s maiden earnings report since its IPO in June 2023.

In the first half of 2023, ADNOC L&S recorded a net profit of $307m, or $0.04 or Dhs0.15 per share, representing a more-than-fourfold increase compared to the net profit of $72m recorded in H1 2022.

The logistics firm recorded revenues of $1.23bn in the first half of 2023, marking an increase of 62 per cent compared to the first half of 2022. This increase was driven by revenue growth across the company’s three business segments: integrated logistics, shipping, and marine services.

The company reported an EBITDA of $417m in the first half of 2023, representing a 188 per cent year-on-year (YoY) increase. This was driven by a higher contribution from all three business segments. This translated into an EBITDA margin of 34.1 per cent in the first half of 2023, substantially higher than the EBITDA margin of 19.2 per cent in the first half of 2022.

ADNOC L&S delivered a positive free cash flow of $82m in the first half of 2023.

Commenting on the company’s strong results, Captain Abdulkareem Al Masabi, CEO of ADNOC L&S, said, “Following our record-breaking IPO, ADNOC L&S has delivered exceptionally strong financial results for the first half of 2023 with a 327 per cent growth in net profit over the same period from last year. This impressive performance is driven by our responsible plans to expand our asset and customer base, decarbonise our operations and enter new verticals in a timely manner, while strategically positioning ADNOC L&S to capitalise on ADNOC’s ambitious growth strategy. As part of our smart growth strategy, we remain focused on extending our geographical footprint, exploring new revenue streams, and unlocking further value for our shareholders.”

ADNOC L&S’ segment-wise performance

ADNOC L&S’ Integrated Logistics segment reported revenues of $729m in the first half of 2023, an increase of 136 per cent YoY following the successful acquisition of Zakher Marine International and expanding its integrated logistics service offering.

The company’s shipping segment reported revenues of $408m in the first half of 2023, an increase of 9 per cent YoY primarily driven by higher charter rates and increased vessel days for tanker and gas carriers.

The Marine Services segment reported revenues of $88m in the first half of 2023, an increase of 19 per cent YoY. Marine Services reported an EBITDA of $17m in the first half of 2023, an increase of 70 per cent YoY. EBITDA margins of 19 per cent in H1 2023 were significantly higher than 14 per cent in H1 2022.

Strategic update
ADNOC L&S continues to make significant strides in executing its growth strategy by expanding into new business verticals, creating fresh revenue streams, and continuing to strategically expand its fleet. During Q2 2023, the company secured a $975m Engineering, Procurement, and Construction (EPC) contract from ADNOC Offshore for the construction of an offshore artificial island. The provision of EPC services in the integrated logistics sector is a new offering by ADNOC L&S, aligned with the Company’s smart growth strategy, enabling it to generate fresh revenue streams by expanding into new business areas.

In addition, ADNOC L&S took the delivery of two of the four newbuilds, LNG dual-fuel Very Large Crude Carriers (VLCCs) scheduled to be delivered this year as part of its strategic fleet expansion. These vessels are categorised as one of the most environmentally efficient in operation today as a result of their dual-fuel engine that is also designed to run on lower emitting Liquified Natural Gas (LNG).

ADNOC L&S has committed approximately $2bn to build more environmentally efficient vessels and has successfully reduced the carbon intensity of its owned fleet by more than 20 per cent between 2018 and 2022.

Dividend outlook
The firm said it has adopted a dividend policy aimed at maximising shareholder value while reflecting its strong earnings potential and cash flow generation.

The company intends to pay a dividend in Q4 2023 for the first half of 2023, with the specific dividend amount to be determined by the Board. At the time of listing, the company indicated an H1 2023 dividend of $65m, which equates to a dividend of Dhs0.032 per share to be paid in Q4 2023. A final dividend is anticipated to be paid in Q2 2024 for the second half of 2023.

Subsequently, ADNOC L&S said it expects to progressively increase the 2023 annual dividend per share on a basis of at least 5 per cent annual growth over the medium term, while regularly reviewing the policy in light of value-accretive growth opportunities.

It intends to pay dividends twice in each financial year, with the initial payment of the first-half results to be made in the fourth quarter of that year, and the second payment following the second-half results to be made in the second quarter of the following calendar year.