Abu Dhabi-Based Adnoc L&S Reports Rise in Revenue, Net Profit

Adnoc Logistics and Services (Adnoc L&S), an energy maritime logistics leader, has announced its third quarter (Q3) and first nine months (9M) 2024 financial results, revealing a revenue of US$2,668 million (AED9,798 million) for the 9M 2024, up 38 per cent compared to 9M 2023, with EBITDA rising by 37 per cent to US$867 million (AED3,184 million) and sustaining EBITDA margins at 32 per cent, while net profit reached US$576 million (AED2,117 million), equating to US$0.08 (AED0.29) per share, a 27 per cent increase compared to 9M 2023.

The Company’s Q3 revenue increased by 32 per cent year-on-year (y-o-y) to US$928 million (AED3,410 million) with EBITDA up by 26 per cent y-o-y to US$275 million (AED1,011 million). Net profit for Q3 grew 18 per cent y-o-y to US$175 million (AED643 million).

This strong financial performance is a result of the continuous execution of Adnoc L&S’ transformative growth strategy, focused on value-accretive investments in energy-related maritime logistics.

After just 18 months after of its record-setting IPO, Adnoc L&S has already delivered commitments to the majority of its strategic investment goal, backed by over 340 years of incremental long-term contracted demand.

Captain Abdulkareem Al Masabi, CEO of Adnoc L&S, said: “These robust financial results demonstrate continued delivery of our strategy and our focus on delivering strong shareholder value through growth. The expected contribution of Navig8 will further boost our profile as a global energy maritime logistics company, while our strong balance sheet provides for further organic and inorganic value-accretive growth opportunities.”

SEGMENTAL FINANCIAL PERFORMANCE FOR 9M 2024

Revenues from Adnoc L&S’ Integrated Logistics segment increased to US$1,671 million (AED6,137 million), up 51 per cent on 9M 2023. This growth was driven by the improved utilization of Jack-Up Barges (JUBs) coupled with the expanded fleet; higher logistics volumes; accelerated Hail & Ghasha project delivery; and Engineering, Procurement and Construction (EPC) project progress, in particular the contribution of the G-Island project (expected to be 70-75 per cent complete by year-end).

Integrated Logistics EBITDA rose by 38 per cent to US$505 million (AED1,856 million) for the first nine months of 2024 against the comparable period in 2023.

Revenues from the Shipping segment increased 23 per cent to US$745 million (AED2,737 million) on 9M 2023, driven by strong charter rates for Tankers and Dry Bulk, coupled with additional revenue from the four new Very Large Crude Carriers (VLCCs) acquired in 2023. This was slightly offset by a reduction in profits from Gas Carriers due to cessation of spot charter-in operations and technical offhire days in Q1 2024.

Shipping EBITDA increased 32 per cent to US$316 million (AED1,159 million) from 9M 2023, contributing to a three-percentage point expansion in EBITDA margin to 42 per cent.

Revenues from the Services segment increased 20 per cent to US$252 million (AED924 million) compared to 9M 2023. This segment generated an EBITDA of US$46 million (AED168 million), up 48 per cent, mainly powered by increased volumes in petroleum port and onshore terminal operations.

STRATEGIC UPDATE

Adnoc L&S continues to deliver on its growth strategy. The Navig8 acquisition, announced during the first half of 2024, will accelerate the Company’s growth strategy. The transaction, which will be immediately value accretive, is projected to boost Adnoc L&S’s earnings per share by at least 20 per cent in the first full year. Regulatory approvals required to complete the deal are in process with anticipated completion remaining 31 March 2025 at the latest.

During the year, the Company also strengthened its asset base with new build contracts for additional energy-efficient vessels. The Company awarded contracts of up to US$2.5 billion (AED9.2 billion) for up to 10 new Liquified Natural Gas (LNG) Carriers, and through AW Shipping US$1.4 billion (AED5 billion) for nine Very Large Ethane Carriers (VLECs) and approximately US$500 million (AED1,836 million) for four Very Large Ammonia Carriers (VLACs).

TECHNOLOGY AND AI ADOPTION

The Company’s Integrated Logistics business manages the complex coordination of transporting millions of tons of critical equipment and resources, coordinating over 80 offshore sites and hundreds of vessels.

The Business Unit offers an Integrated Logistics Services Platform (ILSP) – a turnkey offshore logistics solution that provides customers with planning and resource optimization capabilities through a single digital interface. An AI- powered tool, the Integrated Logistics Management System (ILMS), supports the ILSP.

The ILMS will help maritime planners to make complex operational decisions effectively to reduce delivery times by as much as 60 per cent. The Adnoc Groups Energy AI strategy is driving industry-wide innovation, and ILMS is one of the first use cases that showcases this shift.

SUSTAINABILITY AND DECARBONISATION

The ILMS is an innovative sustainability solution which helps improve operational efficiency. Through the use of ILMS it is anticipated that there will be a reduction in the number of vessels required in operations and therefore a reduction in carbon emissions by up to 30 per cent, specifically to the Company’ Integrated Logistics business segment.

OUTLOOK

The Company raises its medium-term investment guidance to include an incremental US$3 billion+, and maintains its 2024 and medium-term profit & loss outlook: (excluding Navig8 contribution which will be guided separately on a proforma basis in the earnings presentation)

Group Revenues: The Company maintains annual revenue growth of low to mid 30 per cent range in 2024. Over the medium term (2024-2028), the Company expects high single-digit year-on-year percentage growth.

Group EBITDA: The Company anticipates annual EBITDA growth from 2023 to 2024 in the low 30 per cent range. Over the medium term (2024-2028), the Company targets average annual EBITDA growth in the mid-teens’ percentage wise.

Group Net Income: The Company expects annual year-on-year net income growth in the low 20 per cent range into 2024. Over the medium term, the Company targets average annual net income growth in the low percentage teens.

Growth Investments: The Company has significantly increased its capital expenditure guidance, reflecting our commitment to long-term growth and strategic expansion. We now anticipate an additional US$3 billion+ by 2029, beyond the projects already announced, applying the same investment return criteria.

Dividend policy: Remains unchanged with a projected total dividend payable for 2024 of US$273 million (5 per cent increase from 2023 annualized dividend), balance 50 per cent for H2 2024 in Q2 2025, subject to approvals.

Capital Structure: The Company targets a 2.0-2.5x net debt / EBITDA ratio over the medium term, with debt and free cash flows after dividends being the primary funding sources for growth investments.