Adnoc Logistics and Services, a global energy maritime logistics leader, reported a 31 per cent increase in net profit in H1 2024, reaching $401 million, equivalent to $0.05 per share.

 

The company also reported a 42 per cent increase in revenues to $1,740 million, up from $1,390 million in H1 2023. EBITDA rose by 42 per cent to $591 million, thanks to strong performance across all business segments, maintaining EBITDA margins at 34 per cent.

 

The Company’s second quarter revenue increased by 42 per cent year-on-year (y-o-y) to $899 million (AED3,302 million) with EBITDA growing 40 per cent y-o-y to $306 million (AED1,124 million). Net profit for the second quarter grew 28 per cent y-o-y to $208 million (AED764 million). 

 

This financial growth was driven by the ongoing implementation of Adnoc L&S’ transformational growth strategy whereby the Company intends to invest of over $5 billion (AED18.4 billion) in value-accretive growth opportunities in energy-related maritime logistics by the end of 2028.

 

Adnoc L&S has committed over 50 per cent of this strategic investment target one year post its record-breaking IPO, including significant investments against long-term contracted demand.

 

Abdulkareem Al Masabi, CEO of Adnoc L&S, said: “Adnoc L&S has delivered another set of exceptional financial results in the second quarter, maintaining our strong momentum throughout the year and building on the robust growth we achieved in 2023. The sustained execution of our transformational growth strategy is driving our financial performance across all business segments with strong growth in revenues and net profit. To meet the growing demand for low-carbon energy sources in the UAE and beyond, we have continued to expand our market-leading fleet through significant new energy-efficient vessel construction contracts and geographical expansion through our acquisition of Navig8. We will continue to target value-accretive investments to serve an increasing global customer base and deliver long-term value to our shareholders.”

 

SEGMENTAL FINANCIAL PERFORMANCE FOR H1 2024

 

Revenues from Adnoc L&S’ Integrated Logistics segment increased to $1,132 million (AED4,157 million), up 55 per cent on H1 2023. This growth was fueled by higher transported volumes and an enhanced contribution from Jack Up Barges (JUBs) owing to an expanded fleet, increased rates, and further-improved utilisation. Additionally, the continued delivery of Integrated Logistics project activities and the growth of the owned fleet all contributed to revenue growth in the period. EBITDA rose by 42 per cent to $329 million (AED1,208 million) in the first half of the year.

 

Revenues from the Shipping segment increased 27 per cent to $519 million (AED1,906 million) on H1 2023, driven by robust charter rates for Tankers and Dry Bulk, along with additional earnings from the four new Very Large Crude Carriers (VLCCs) during 2023. This growth in Shipping was partially offset by a decrease in earnings from Gas Carriers due to a reduction in spot charter-in activity and lower LNG Carrier time charter equivalent rates compared to H1 2023. 

 

Shipping EBITDA increased 38 per cent to $232 million (AED852 million) from H1 2023, contributing to a 4-percentage point expansion in EBITDA margin to 45 per cent.

 

Revenues from the Marine Services segment increased 1 per cent to $89 million (AED327 million) compared to H1 2023. This segment generated an EBITDA of $29 million (AED107 million), up 64 per cent, primarily driven by higher volumes in petroleum ports operations and by the marine terminal operations contract with Adnoc Offshore effective from 1 January 2024.

 

STRATEGIC UPDATE

 

The acquisition of Navig8 will expand the Company’s geographic footprint and its diversified fleet by adding 32 owned modern tankers and a presence in 15 cities across five continents. Navig8’s global presence will greatly enhance Adnoc L&S’ international profile as a global energy maritime logistics company and expand its blue-chip customer base in key markets. The acquisition, announced in Q2 2024 and currently subject to customary regulatory approvals, will be immediately value-accretive and is projected to increase earnings per share by at least 20 per cent for Adnoc L&S shareholders.  

 

The Company awarded South Korean shipyards, Samsung Heavy Industries and Hanwha Ocean, up to $2.5 billion (AED9.2 billion) in shipbuilding contracts for the construction of 8-10 new Liquified Natural Gas (LNG) Carriers. The vessels are expected to be delivered beginning 2028 and will be time chartered to Adnoc Group subsidiaries for a period of 20 years to support the growing export volumes of natural gas as an in-demand and critical, lower-carbon transitional fuel. The new vessels will increase the Company’s fleet of LNG Carriers from 14 to at least 22 vessels.

 

In Q2 2024, AW Shipping, a strategic joint venture between Adnoc L&S and Wanhua Chemical Group, signed shipbuilding contracts with Jiangnan Shipyard in China priced at approximately $1.9 billion (AED7 billion) in aggregate, for the construction of nine Very Large Ethane Carriers (VLECs), priced at approximately $1.4 billion (AED5.1 billion) and scheduled to be delivered from 2025 to 2027, and two Very Large Ammonia Carriers (VLACs), priced at approximately $250 million (AED918 million) with the option for another two VLACs at the same pricing, scheduled to be delivered from 2026 to 2028. The VLECs will be deployed on 20-year time charter contracts, generating revenue of $4 billion (AED14.7 billion) through 180 years of aggregated contract coverage. The VLACs are not yet contracted and are targeted to serve the emerging ammonia transportation market, which is anticipated to see substantial growth. 

 

TECHNOLOGY AND AI ADOPTION

 

Adnoc L&S continues to accelerate the application of industry leading Artificial Intelligence (AI) solutions to improve operational efficiencies and increase the safety for its people and assets, enabling a 100 per cent HSE culture. In 2023, the Company strengthened its use of the “Smart Ship” system, an AI-based maritime predictive maintenance solution for planning optimisation and operational efficiency of ocean-going vessels, improving overall fleet performance and asset reliability. 

 

The Company also deployed the AI-based “SMARTi” system which is running onboard more than 80 vessels to bolster maritime health and safety, by acting as an early warning system in the prevention of harm and injury to seafarers. 

 

These AI systems have played a critical role in the Company’s market-leading HSE success including a 30 per cent decrease in the carbon emissions intensity of fleet operations since 2020, and a 71 per cent reduction in the Lost Time Incident Frequency rate between 2018 and 2023. The newbuild LNG Carriers from South Korea will employ cutting-edge technologies to increase fuel efficiencies and carbon intensity reductions in line with Adnoc L&S’ sustainability goals.

 

SUSTAINABILITY AND DECARBONISATION

 

Adnoc L&S serves as a critical custodian of the UAE’s maritime legacy and continues to accelerate its sustainability journey in line with Adnoc Group’s 2045 Net Zero target, the UAE’s 2050 Net Zero strategy, and the International Maritime Organisation’s 2050 Net Zero target and goal to reduce carbon emissions intensity by 40 per cent by 2030. 

 

The Company continues to make major progress in this journey, including a 24 per cent improvement in energy efficiency across the Company’s shipping fleet since 2020; approximately $2 billion (AED7.3 billion) committed to building environmentally efficient vessels; and with 13 vessels running on biofuels since 2020.

 

The order placed for the new LNG carriers by Adnoc L&S, along with the orders for VLECs and VLACs placed by AW Shipping, represent a major step forward in the Adnoc L&S transformational growth strategy by accelerating the Company’s decarbonisation objectives. The VLECs can be powered by ethane or conventional fuels, the VLACs can be powered by liquefied petroleum gas (LPG) or conventional fuels. As new energy resources, ethane and ammonia will play critical roles in decarbonising industrial processes around the world.

 

The LNG vessels will feature cutting-edge sustainability technologies, including a cargo conditioning system designed to reduce LNG cargo evaporation whilst in transit, systems to direct cargo boil-off gasses to the engines that will increase fuel efficiency and decrease fuel consumption, a real-time emissions monitoring system, and pioneering cargo containment systems to reduce methane emissions. --TradeArabia News Service