Adnoc L&S Surges to $4 Billion Profit Forecast Amidst Soaring Tanker Rates

Adnoc Logistics and Services (Adnoc L&S) has elevated its full-year profit projection for the fourth time this year, driven by a more than quadrupling of third-quarter earnings. This surge is largely attributed to escalating tanker charter rates, influenced by geopolitical disruptions stemming from the Iran war.

The Abu Dhabi-listed company reported a significant leap in net profit attributable to equity holders, which soared by 310 per cent to $842.7 million in the three months ending September, up from $205.4 million in the same period last year. Revenue also experienced substantial growth, rising 160 per cent to $3.29 billion, while earnings before interest, taxes, depreciation, and amortisation (Ebitda) nearly tripled to $1.09 billion.

Consequently, the shipping arm of Abu Dhabi National Oil Company now anticipates an annual net profit of approximately $4 billion, representing growth in the low-360 per cent range. This revised outlook surpasses its previous forecast of high-110 per cent growth and includes trading activities through October.

"Resilience has defined our performance this year, reflecting the strength of our people and our businesses," stated chief executive Abdulkareem Al Masabi. These results mirror a broader windfall experienced across the tanker industry.

Daily rates for very large crude carriers (VLCCs) on the Gulf-to-Asia route exceeded $1 million in September, according to Bloomberg data. By early October, these rates had climbed to around $1.4 million, a dramatic increase from the $30,000 to $45,000 range observed before the conflict in February. This escalation is partly due to fewer shipowners being willing to navigate the Strait of Hormuz.

While these conditions have benefited vessel owners, higher freight costs and security concerns have introduced complexities in the movement of oil and gas from the Gulf. Adnoc L&S's profit for the first nine months of the year, attributable to equity holders, grew by 219 per cent to $1.96 billion, with revenue increasing by over 87 per cent to $6.96 billion.

The company's board has approved a third-quarter interim dividend of $85.3 million, payable to shareholders on record as of November 23. Adnoc L&S, which serves a global clientele in over 50 countries, remains committed to its policy of increasing annual dividends per share by at least 5 per cent through 2030.

In line with its strong financial performance, Adnoc L&S is investing in fleet expansion. The company has allocated $7 billion in capital expenditure through 2030 and secured approximately $24 billion in forward-contracted revenue, enhancing its earnings visibility. The third quarter saw the delivery of 14 new vessels, including six VLCCs, with an additional 10 expected before year-end. Furthermore, three very large gas carriers and six next-generation LNG carriers are slated for delivery in 2029.