Qatar Fuel Company Q.P.S.C. ("WOQOD") (QFLS.QA) Q4 FY2025 Earnings Call Transcript & Summary

Hello, everyone, and welcome to WOQOD's conference call. Please note that this call is being recorded. I'd now like to hand over to our moderator for today from QNB Services, Phibion, you may now go ahead, please.

Thank you, Eli. Good morning to you all, and thank you for joining us for WOQOD's or Qatar Fuels 4Q and FY of 2025 Earnings Conference Call. On today's call from WOQOD's management team, we have the CFO, Pradeep Kumar; the Finance Manager, Abdulrahman Al-Hammadi; and the IR Office, Ahmad Said Al-Mansoori. And as usual, they will first present the results, and we have a Q&A session immediately afterwards. Let me now turn over the call to Ahmad to begin the call. Over to you, sir. Please go ahead.

Thank you, Phibion. Good day to all the participants, and we hope everyone is keeping safe and healthy. We welcome you all to WOQOD's fourth quarter and December 2025 results conference call and appreciate your participation as WOQOD is committed to continuously enhance its Investor Relations initiatives. This is to strengthen our communication and improve transparency with all members of the global investment community. The presentation of this call will be available on the Investor Relations section of our website. Any statement that refers to expectations, projections, guidance or any other characterizations of future events, including financial projections or future market conditions, is a forward-looking statement based on the assumptions today. Actual results may differ materially from those expressed in these forward-looking statements. The company cannot disclose any commercially sensitive information due to the confidentiality agreement signed with suppliers. Please refer to Slide #2 for the full version of disclaimer statements. All figures expressed in this call are on Qatar riyal and the conversion for the same to U.S. dollar is QAR 3.64 to only USD 1. Now I would like to hand over the call to our Finance Manager, Mr. Abdulrahman Al-Hammadi, to provide a brief overview of WOQOD and update on the key operation activities.

Thanks, Ahmad. The key vision of WOQOD is to be leading the petroleum product distributions and related services marketing company in the region. I'm on Slide 4, which shows the overview of WOQOD Group. WOQOD started operations in 2002 with exclusive rights for storage and distribution of petroleum products in the state of Qatar. Operations started with 2 petrol stations in 2003 and has grown to 128 stations at the end of December 2025. The chart on the right shows WOQOD's station network. WOQOD also owns and operates 13 FAHES center for inspection of vehicles across of the state of Qatar. Slide #5, which shows the key operations of WOQOD Group. The key operations of WOQOD Group are diesel and gasoline fuel distribution and sales, jet fuel distribution and sales, shore-to-ship and ship-to-ship bunkering, LPG distribution and sales, natural gas distribution and sales, fuel bunkering, bitumen operations, C-Store and Auto Care activity, vehicle inspection services and office leasing. Turning to Slide 7, shows the diesel and gasoline fuel sales volume trend analysis. As mentioned before, the core activity of WOQOD is fuel distribution and sales in the state of Qatar. Total fuel sales higher by 1% during the year 2025 as compared to 2024, driven by market demand. Diesel sales volume decreased by 1% during the year 2024 versus the same period last year, driven by macroeconomic factors. Combined gasoline sales volume increased by 3% during the year 2025 as compared to 2024, driven by market demand. On a quarter-on-quarter basis, fourth quarter 2024 diesel sales volume decreased by 5%. However, gasoline sales volume increased by 6%. Average fuel price for diesel and gasoline decreased by 1% each during 2025 as compared to the same period last year. Turning to Slide 8. Jet fuel sales volume comparison. Jet fuel sales remained almost same as compared to the same period last year. On a quarter-on-quarter basis, jet fuel sales volume for fourth quarter 2025 decreased by 4%, driven by market demand. Jet fuel price decreased by 10% during the year 2025 as compared to the same period last year, driven by change in crude oil price. Combined sales volume of all petroleum products increased by 1% during the year 2025 as compared to same period last year. Turning to Slide 9 shows the quarterly trend of retail fuel sales volume trend. Overall, retail volume of WOQOD petrol station increased by 3% during the year 2025 against the same period last year, driven by increased market demand. Retail diesel sales volume increased by 2% and gasoline sales increased by 3% during the year 2025 as compared to the last -- to the same period last year. On a quarter-on-quarter basis, retail diesel sales volume increased by 1% and gasoline sales increased by 7% in fourth quarter 2025. The market share of WOQOD in petroleum retail market in the state of Qatar reached to about [ 84% ] during the year 2025. Nonfuel retail sales decreased by [ 60% ] during the year 2025, mainly on account of decrease in Sidra and APC sales. Now I would like to hand over the call to our CFO, Mr. Pradeep Kumar, to discuss the key financial results.

Thank you, Abdulrahman, for all the volume updates. Good day, everyone. I would like to discuss the consolidated financial results of WOQOD for the year 2025. Slide 11 shows the revenue trend of WOQOD. Revenue from petroleum products account for nearly 97 percentage of the total revenue. WOQOD achieved a total revenue of QAR 26 billion round off, for the year 2025 as compared to [ QAR 28 billion ] during the same period last year, resulting in a decrease of 8 percentage. Although overall fuel sales volume increased by 1 percentage in 2025, the decrease in average sales price by approximately 6 percentage resulted in offsetting the revenue increase from volume. On a quarter-on-quarter comparison basis, the total revenue for fourth quarter remained stable. Moving to Slide 12, which shows the net income trend analysis. WOQOD has made a net income of [ QAR 1.040 billion ] for the year 2025 as compared to [ QAR 1.052 billion ] during year 2024, slightly lower by 1 percentage, mainly due to decrease in other income. WOQOD has made a net income of QAR 288 million for the fourth quarter of '25 as compared to QAR 281 million during the same period in '24, representing an increase of approximately 2%. On a quarter-on-quarter basis, the net income for fourth quarter 2025 decreased by QAR 4 million, mainly driven by decrease in sales volume. The detailed analysis of net income variance is given in next slide. Slide 13 shows the key variance analysis of net income for the year 2025 as compared to same period last year. The net income for 2025 decreased by 1 percentage, that is QAR 12 million as compared to 2024, mainly due to following factors. Net fuel operating income increased mainly driven by increase in overall fuel sales volume by 1 percentage and net reduction in operating cost. Trading stock price variance of QAR 39 million is mainly driven by impact of price movement on jet fuel inventories. Nonfuel income decreased mainly driven by prevailing market conditions. As Abdulrahman mentioned before, we are facing a lot of headwinds in that area, so that impacted our income from that segment. Dividend and other is lower mainly due to timing of interim dividends and low interest rate driven by the market factors, partly offset by lower G&A expenses. To conclude, WOQOD's results reflect the resilience of our business, the financial strength and our continued focus on safety, reliability and operational efficiency. WOQOD's fundamentals continue to remain robust, and WOQOD is committed to meet all its strategic goals while placing safety as a top priority. WOQOD has a strong leadership committed towards delivering the results to the shareholders. With this, we are ready for the Q&A session. Thank you.

[Operator Instructions] Your first question comes from the line of [ Ravi Musa ] of [ QIC ].

This is [ Ravi ] from [ QIC ]. Two questions from my side. The first is how many fuel stations are you planning to open over 2026, 2027? And can we expect a similar payout ratio for 2026, similar to 2025?

We have currently 128 stations and our plan for this year is we are going to open additional 10 stations. So by end of this year, we'll be having 138 stations in operation. Next year plan 2027, we are still working on it, but definitely, it will be in the range of 5-plus stations. We're still firming up numbers. We are working on it. Regarding the payout, of course, WOQOD always and you look at the trajectory of WOQOD dividend payments, we always want to pay healthy dividends. Our intent is to maximize the dividend, but wait for next year results to announce the same.

Your next question comes from the line of Bob Skepper of Ashmore.

Just following up on the question of the new stations. So yes, between 5 to 10 stations, I think you said 10 in the press release at the upper end. That's obviously an acceleration of the footprint from what we've seen over the last kind of 3 or 4 years. Like what's the reason for that kind of change in direction and that acceleration? And just in terms of the CapEx linked to those stations, like what does it cost per station? And what do you think the volume uplift will be?

Well, we have been working behind the scene on these projects. Now it's firmed up. So the construction started and plan to complete 10 stations this year. Regarding the CapEx on this, definitely, 2026, definitely because of these stations and other liability project, we expect to spend more money towards these projects and other liability projects, definitely much more than 2025 CapEx.

Okay. And in terms of the impact on volumes, like do you expect to see retail volumes increase off the back of this? Or is it more kind of defensive? Like how should we think?

Well, this year, in 2025, we have seen 3 percentage increase in the retail fuel sales volume. So our expectation is in the same range for coming years as well for the retail sales.

Great. And then I just wanted to ask on the nonfuel operating income, which declined again this year. I don't know, maybe you could talk about kind of any initiatives within Sidra and Auto Care or other kind of nonfuel businesses, just how we should be thinking about the year 2026.

Yes. A lot of it is driven by purely the market conditions. And we are looking into all possible opportunities to improve revenue. We are taking many initiatives to improve it wherever possible. And also a lot of support service that we provide all in the B2B segment, it's all driven by the current market situation. So we expect that to improve in the coming years.

Your next question comes from the line of Abhinav Sinha of Lesha Bank.

I have two questions. So one is on the pricing. In the PPT, it's written that the pricing declined 6%. So I understand that part of it is because of the lower oil price as oil was around 18% down in 2025. So like usually, how does it work? Like -- so if I do the ratio, so 6 to 18, so it's like 1/3 of price decline of oil was translated into your price decline. So would it be a fair assumption? Or is there any other formula which works? And second question is like your net income was down only 1%. But if I look at the dividend, it was down around from 1% to [ 2.9% ] for the full year. So any reason for that? And how should we look at it going forward?

On your first question of pricing, the pricing of our fuel products, all the fuel products distributed by WOQOD, the pricing is decided by state of Qatar through QatarEnergy. We have no control on the pricing. We are distributor only of the fuel products. Regarding the net income, you're right, it decreased only by 1 percentage. But as I explained here and as you know very well, we have a lot of CapEx projects, which is ongoing, and we started last year, 10 petrol stations going to be completed this year. Definitely, we are planning for that as well. So that's one of the reasons.

Your next question comes from the line of [ Ravi Musa ] of [ QIC ].

Just a follow-up on the CapEx per station question. Can you provide any guidance for 2026? How much do you expect to spend on these new stations?

Definitely, it's going to be north of QAR 250 million plus because it's not only the stations, we have other liability improvements that are also to be done this year. So we expect to be in the range of QAR 200 million to QAR 300 million in that range.

QAR 200 million to QAR 300 million total CapEx for the year -- for the full year?

That's the cash out, yes, that we are -- minimum, yes.

We don't have any pending questions. I'd now like to hand back to Phibion from QNB for final remarks.

Thank you all for joining us. If there are no further questions, that brings us to the end of our call. I would like to thank the WOQOD management team for responding to investors' questions. Please do join us for the Q1 call in future. And that brings us to the end. Thank you.

Thank you for attending today's conference call. You may now disconnect. Goodbye.