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Adnoc L&S reports 327% year-on-year increase in H1 2023 net profit

The company recorded revenues of $1.225b in the first half of 2023, marking an increase of 62 per cent compared to the first half of 2022

Adnoc Logistics and Services (Adnoc L&S), a global energy maritime logistics leader, on Thursday announced its financial results for the first half of 2023 (H1 2023), marking its maiden earnings report since its record-breaking IPO in June 2023 on the ADX exchange.

In the first half of 2023, Adnoc L&S recorded a net profit of $307 million, or $0.04 or Dh0.15 per share, representing a more-than fourfold increase compared to the net profit of $72 million recorded in H1 2022.

The company recorded revenues of $1.225 billion 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 (Earnings before interest, taxes, depreciation, and amortization) of $417 million in the first half of 2023, representing a 188 percent 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 $82 million in the first half of 2023. The company had no debt financing drawn by 30th of June 2023, strategically positioning itself for the implementation of its announced smart growth strategy.

Commenting on the company's strong maiden 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."

The company's Shipping segment reported revenues of $408 million 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. This growth was partially offset by a lower contribution from Dry-bulk shipping due to reduced charter rates.

Shipping reported EBITDA of $168 million in the first half of 2023, reflecting an increase of 61 percent YoY. EBITDA was further supported by a 7 per cent reduction in direct costs during the first half of 2023. This translated into delivered EBITDA margins of 41.2 percent in H1 2023, significantly higher than 28 percent in H1 2022.

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

Dividend

The Board has adopted a dividend policy aimed at maximising shareholder value while reflecting the company's strong earnings potential and cash flow generation. This approach enables the Company to retain sufficient capital to fund ongoing operations while investing in long-term value-accretive growth.

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 $65 million, which equates to a dividend of Dh0.032 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. At the time of listing, the Company indicated an H2 2023 dividend of $130 million.

Subsequently, the company expects to progressively increase the 2023 annual dividend per share on a basis of at least 5 percent annual growth over the medium term, while regularly reviewing the policy in light of value-accretive growth opportunities. The Company intends to pay dividends twice 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.