Shares of Abu Dhabi National Oil Company (ADNOC) climbed 1.5% as the company reported a robust earnings performance, surpassing both Morgan Stanley (NYSE:MS)'s estimates (MSe) and Visible Alpha consensus.
The company's consolidated EBITDA reached $954 million, beating MSe by 5.6% and Visible Alpha consensus by 7.3%, primarily driven by higher retail margins and strong growth in GCC retail volumes.
ADNOC's retail operations emerged as a particularly strong point, with an 8.9% year-on-year (YoY) increase in GCC retail volumes, exceeding expectations by 1.7%. Convenience store gross profits also saw a significant boost, expanding 22.5% YoY.
The company's strategic expansion efforts were highlighted by the contracting of 30 dealer-owned, company-operated stations in Saudi Arabia, with plans to open an additional 30-40 stations by 2025.
Financial stability was another highlight in the report, with net debt to EBITDA ratio standing at a comfortable 0.7x, notably lower than the MSe projection of 1.1x. This indicates a stronger balance sheet than anticipated, with free cash flow (FCF) also reported to be higher than Morgan Stanley's expectations, even after adjusting for working capital changes.
In line with its dividend policy and consistent with MSe forecasts, ADNOC announced a $350 million dividend for the second half of 2024, showcasing the company's commitment to shareholder returns.
