Shell Oman Marketing Company SAOG (SOMS) Earnings Call Transcript & Summary

Good morning, everyone. Before I formally start the session, I just would like to know that people online can see us and hear us. So my colleagues in Shell, can you please confirm if you can see us and hear us?

Confirmed, we can see you and we can hear you.

Thank you. And I would also like to -- for people to put themselves on mute while we're actually going through the session. So again, good morning, everyone. My name is Mahmoud Al Abri. I'm the GM for Corporate Relations and Investor Relations Officer. I would like to formally welcome you to our first Investor Relations session for the year 2025. We will discuss our performance and highlights for 2024 as well as we will shed some light of our growth plans for 2025. And before we start, I would like just to make sure that wherever you sit now, make sure you sit in a safe place, know your exits whenever there is an emergency plan. I will quickly go through a very quick introduction from my colleagues, and then I will request Dr. Mohammed to set the scene for today's session. So maybe over to you, Ali.

Yes. My name is Ali Al Amri. I'm the Trade & Supply GM for Shell Oman.

Good morning, everyone. This is Lamees Al Lawati, the Chief Financial Officer.

Abbas Al Lawati, the Chief Internal Auditor.

Said Al Rawahi, GM, Low Carbon Products.

Suresh Nair, GM for Mobility and Convenience.

Sultan Al Shidi, GM of Human Resource.

Burair Al Lawati, GM of Strategy and Energy Transition.

Good morning, everyone. My name is Mohammed Balushi. I'm the CEO of Shell Oman and Ramadan Mubarak to all of you, and thanks for dialing in. This is actually our first Investor Relations meeting for this year 2025. And I want to basically, again, thank you all for dialing in. We have around an hour where we will be sharing the business performance of the year 2024 as well as share some of the plans that we are actually having for this year moving forward. We will be definitely welcoming all the questions and inquiries that will come from the people who dialed in. So let's have a very interactive session where we can also learn from your insights. Thank you very much.

Thank you, Doctor. And as you said, Doctor, this is how the session agenda will look like. So we'll have around 20 to 30 minutes on business downloads, and then we'll have the last 30 minutes for Q&A. So whenever you have questions, please leave it to the last 30 minutes. So let me start with our health, safety, security and environment. The company has done remarkably well in 2024 with zero recordable incidents. Additionally, the company has achieved all the HSSE [ KPIs ] part of 2024 plan. Also, the company has communicated and engaged all the employees around the 2025 priorities. And in terms of security, last year, we have done a couple of security awareness sessions and cybersecurity sessions awareness to our employees as well as to our partners and contractors. Finally, on environment, we have completed our environment assurance plan for 2024 to our key assets of the company. As you can see, there are numerous of initiatives that have been executed in 2024 when it comes to HSSE, which showcase the company's commitment in safety as well as the leadership Shell Oman has in safety in the industry in total. If I move also briefly to the plan, the company will continue to maintain Goal Zero and drive the culture of care for its employees and partners. In terms of performance, the company will continue to manage risk on a daily basis, but also to put some more focus on emerging risk like the newly hydrogen service stations and the EV business as well. In terms of worker welfare enhancement, the company will focus on worker welfare enhancements across different class of businesses, but also with our contractors. In terms of assurances and implementations, the company will be focused in terms of Robust Asset Integrity Program for 2025. And lastly, in terms of risk-based HSSE MS standards, the company will put focus to simplify and fit for purpose learnings and investigation process in 2025 plan. Let me move to Lamees.

Yes. Thank you, Mahmoud. And like Mahmoud has mentioned earlier, we will start by sharing a quick overview on the financial performance and then I hand over to my colleagues around the table to share specific business updates and key performance indicators from the different business units. Now the financial overview that you see in front of you here is consistent with our post Board disclosure as audited by our external auditors and as endorsed by our shareholders in the AGM yesterday. So in 2024, our revenue stood at OMR 492 million, slightly lower than where we had exited the year 2023. But then managing the portfolio of projects and the different lines of businesses that we have, maximizing the profitability from within. We managed to narrow that gap of 5% at the top line to 2% reduction versus the same period in 2023 at gross profit level, whilst maintaining our gross margin percentage at 7%. Other income, this is the income that we predominantly received from the associated services in our service stations, things like shops income, the colocators, the brands that we tie up with -- income that we receive from car care services as well in addition to the fees that we receive from site operatorship. So this has been a key focus area for us consistently that we have been mentioning to the investors last year. It's a key lever in our strategy of the company to grow other income. A lot of focus initiatives actually took place in the year 2024 to improve our performance in other income. So if we focus on the select sector, we have mentioned to the investors last year that we have acquired a big portfolio of select stores. So we're focused on improving -- enhancing the customer experience in these shops by upgrading the look and feel of these sites and adding more modern and appealing offers to our customers. So a lot of focus initiatives in addition to also a strategic tie-up that we have with [Technical Difficulty] to improve and enhance again our customer experience and improve our supply chain and ensuring that we provide the same level of products or the same quality of products consistently across the shops that we have. Now all of these initiatives, in addition to other focused initiatives that we have done in that space have actually grew our other income to around 2% in the year 2024 versus the year prior to that. OpEx was another key focus area for us in the year 2024, focusing on cost optimization. We have filled a lot of focus initiatives to optimize OpEx, reduce cost, improve operational efficiency as well as set the organization for growth and sustainable growth going forward and improve its competitiveness. So a lot of initiatives were also introduced in that space, resulting in an overall decrease of around 10% in OpEx. The number that you see in front of you in the table here is including depreciation, which to a certain extent offset the actual reduction that we had in operational expenses. Now most importantly, a lot of these initiatives that we have done in the OpEx space, we had -- we've governed them in a way to ensure that there is no compromise on our HSSE, health, safety, security standards and practices as well as our asset integrity and staff wellbeing. The one point that I would also like to emphasize in here is working capital. So working capital efficiency was also another lever that had a lot of attention in the year 2024. So we wanted to reduce the limitations related to working capital management for an operational company like ours. And as a result, then reduce the borrowing need or dependency. Now a lot of focus initiatives were also done in that space to improve our collection of accounts receivable in the market, focused initiatives to monitor and plan our inventory balances as well, which has resulted in really good performance in working capital management, boosting our cash flow position at year-end, like you can see in the bottom graph over there, reporting around OMR 24 million in cash flow from operations, the highest level since years. But then in addition to that, if we look at the borrowing cost, we've managed to maintain it at around the same level as a result of all these initiatives that we have contributed in the working capital space despite all the pressure that we have seen in the market.

Thank you, Lamees. Now let me move to Suresh, Mobility.

Thank you. So the theme for the Mobility and Convenience business will be set at around one of growth, both for 2024 and now moving into 2025 as well. How we will do this is essentially around building our business, which is resilient while future-proofing as well. The focus will be on simplification in terms of the areas where we choose to focus and give us maximum value but we will also ensure that there is a tighter and focused attention around discipline of spending as well. That's consistent with what our CFO has mentioned in terms of cost management efforts, which is starting to yield material results in terms of SOMS' bottom line performance. Lastly, around the growth agenda, specifically for the Mobility business, the focus will be around total customer value. What is total customer value? Essentially, it means ensuring that we have a better grip on every customer every time they come and interact with us at our fuel, our forecourt and our shop to make sure that we are seeing better returns for each transaction, larger returns. In layman terms, this would mean that our customers are coming to us, spending a lot more and returning to us. So the 5 areas of growth for mobility, which we'll be focusing on in the year 2025; let me start at the top in terms of new site entries. Recently, we announced the official opening of our hydrogen site or happily named Sustainability Oasis. This is a testament to where we boldly are announcing our intent to grow not only in the convenience fuel space, not only in the traditional fuel space, but also in the energy transition. We expect to see up to 5 total new-to-industry stations this year, one of which has already officially been opened. There will be a soft launch on a second in the coming 4 weeks and more to come so watch this space. So that's in terms of LTI. In terms of offerings, we have been talking very aggressively about our V-Power performance, and we have seen a very -- not only healthy but a sustainable growth in this differentiated fuels offering. But I'm also excited to announce that we have soft launched the Fuelsave 91. You would have seen some balance to this effect in our hydrogen station launch in the media a couple of weeks ago. Watch this space because this is also expected to be both another game changer in terms of differentiated offerings for Shell Oman, but one which is closely linked as well to the energy transition through a lower carbon fuels offering. Now in the B2B space, we continue to be active and pursuing healthy both organic and inorganic growth by differentiating our services with that of the competitors, particularly in providing innovative payment services, also providing technological solutions like our [ Vehicle ] Recognition System, which is a key differentiator in terms of services from a fleet management perspective. Area of growth number 3 is around our convenience retailing or the only for it will be nonfuel retailing. We intend to add up to 5 additional new stores this year in its main look and feel, but we also intend to add further beyond that some modular designs. So the shop, for example, which you see at our hydrogen station today is one such example of a modular design, expect to see more of this. You'll also see the convenience retailing business grown in the form of car washers and lubricants be as well much more actively. The last segment, which I'd like to talk about is the energy transition in the mobility and convenience space. A testament to that is the hydrogen site. But I would also like to bring about the attention that if you pay close attention to the details of the construction and the operation of the site, we are looking at more energy-efficient, lower and zero carbon solutions, both in terms of how we operate the site, but also the product offering to the customer. Although this is not scale hydrogen sold or scaled up to a commercial scale, this provides a platform, both for the Sultanate and Shell to jointly learn how to produce, how to store and how to distribute or deliver hydrogen to vehicles in the Sultanate, and that will put us in a better position to scale this up commercially in the future. Lastly, in the energy transition, you are going to see more active partnerships from Shell, do watch this space. And the initial manifestation of where you will see this is in the form of EV charging points, which means expanding the number of charging points we have today in our existing stations to be bolder to include destination locations as well. Thank you. With that, I pass it on back to my colleague, Mahmoud.

Thank you, Suresh. Now let me move to Mohamed El Fatatry for Lubes. Mohamed?

Yes, hi Mahmoud. Am I audible? Okay, great. So I think for lubricants, we had a great year in 2024. I think at local level, we managed to grow our market share in 2024, bring also growth for our overall volume at integrated level by double digits for the second year. We maintained our leading position in the country, but we also leveraged our global leadership as Shell Lubricants for the 18th consecutive year. I think one of the highlights last year as well was on the export markets. So we have seen growth in terms of volume and consumption. We've also added Yemen market in adding 2 structural distributors newly assigned in the market of Yemen. We had good trajectory in terms of volume, and we're seeing also continuation to that in 2025, given the numbers of -- estimated numbers for Q1. From a blending plant perspective, again, we have been promoting our Made in Oman products that are blended in our blending plant in Mina Al-Fahal. We added one more market in terms of export markets. We introduced a lot of new products and SKUs in 2024, including Shell coolants in packs. And later in the year, we also introduced coolants for the B2B sectors and drums. While doing so, our production levels have increased. We reduced our operating costs and OpEx, and we also maintained above industry average OTIF, which is On-Time In-Full KPI for supply chain. In fact, our blending plant was the highest OTIF across all Shell blending plants in the EMEA region. In terms of customer operations, we had a good year in 2024 in terms of serving our all downstream businesses in Shell Oman Marketing. We've added also new digitization platforms. We shifted a lot of the manual work to digital portals for customer payments. And we have also increased our customer satisfaction score by 0.2 points in 2024. For 2025, our focus, again, remains on operating with high HSSE standards. There is an aggressive growth agenda, I think, presented again in the last 2 years of double-digit growth at integrated level. We are exploring new revenue streams that includes markets, products as well as maybe more detailed in terms of serving same products but in different packaging, hearing more customers in the B2B sector, and we're trying to penetrate new industrial sectors in the Sultanate, including mining. We are also improving our digitization. So lately, we launched our Trade Loyalty app share app, which is enabling the trade channel making their orders via a Shell application. And we are also moving into more technical services in the B2B segments, which is also we're aiming at monetizing it, not just over it for free. In a nutshell, that wraps up our 2024 and 2025 focus area for Lubricants. Mahmoud, back to you.

Thank you, Mohamed. Now let me move to Said Al Rawahi to talk about the Low Carbon Products and Sectors.

For Low Carbon products 2024, growth compared to 2023. We have closed the year with a strong HSSE performance, which was achieved in the past years. Also we have zero fuel delays in all the airports when it comes to aviation business. We have also implemented CVPs for commercial customers, which is also an automated fueling system to monitor fuel consumption on other customer sites. We also started resumed our [indiscernible] pipeline operation when it comes to the Marine business segment, which has been helping to enhance our volumes compared to 2023. We're also planning this year to finalize the commissioning of fuel farm at Salalah Airport at the end of Q1. Now the plan when we look at the plan for 2024 [Technical Difficulty] compliance and excellence [Technical Difficulty] we are looking at our value proposition when it comes to market differentiation on. At the same time, also looking at new operating financial opportunity [Technical Difficulty].

And I think this will come to the end of our business highlights for last year and focus on 2025. Now I move to open the space for any Q&A. But before that I just want to check again if our audio and the camera is working fine. Can someone just confirm to me. Hello?

We can see you but the audio is not a 100% clear.

Let's try again. Do you hear us now?

Yes, there's a slight improvement.

So let's open the Q&A.

In the presentation, you have mentioned that the revenues were lower, mainly due to the lower volumes in the B2C business. So can you provide insights into the volume trends at your fuel stations? Have you seen a decline in the throughput per station?

[Technical Difficulty] I hope that answers your question.

Maybe just to complement to what Suresh has just mentioned. [Technical Difficulty].

Just to confirm again. Did you hear the answers clearly? Just to check the audio is working? Did you hear the answers clearly?

Yes, but still the audio, there is a disturbance.

We try to fix that. Any other question? Okay. Just one more question is that on the fourth quarter, there was a 15% decline in the NFR segment compared to the previous quarter. So can you explain what caused this decline? And also with the addition of 5 new select stores and new car washes, what kind of revenue contribution is expected?

[Technical Difficulty] So to compare the 2 consecutive quarters, I think we don't see a specific concern in Q4. It's just I would attribute it to the overall seasonality in Q4 being slightly lower than Q3.

Thank you Lamees. So just confirming that. So the quarter 4 traditional returns will be lower than quarter 3 attributed due to seasonality. But the other point specifically for the Mobility business, the reason our targeted investments are predominantly also in the convenience space is because this is where we are seeing higher bang for our buck and higher returns, both in terms of absolute returns, but also in terms of the shorter gestation period. We are seeing it takes us to bring a project from paper to life in less than 90 days in some cases, and that's why we've been targeting our growth in this segment. We expect to see further growth, and that's represented in the 5 additional stores that represents about a 10% additional increase in our convenience retailing footprint without me necessarily going into the specific absolute increase for the NFR business. But I revert back to what Lamees mentioned as a headline in terms of both seasonality but also our targeted growth in this segment. Thank you, [ Manav ], for the question.

Any other questions from other team members? Yes.

Just a few questions on the other segments like the lubricants. You mentioned that your market share -- domestic market share of lubricants has gone up, and you have opened new markets everywhere else. But at the same time, what I'm seeing is your revenue has been relatively stable. So does that mean the market was shrinking in Oman or was there a pricing pressure on the lubricant side?

Are you referring to lubricants revenue or which lubricant line are you?

Lubricants. Because Lubricant, you mentioned OMR 32 million revenue 2023 and this year also same revenue. But at the same time, you're claiming that you have increased your market share in Oman. And despite being new markets getting opened, I don't see the improvement in revenue for lubricants. So just wanted to check what could be the reason on that.

So I think, first of all -- so definitely, thank you for the question. The main reason is mainly 2 things. One is the product mix. So as I mentioned, the Yemen market is a conventional market, where the unit margins of the mainstream products are usually much lower, for example, than the products that we sell in Oman. The other reason was related to the geopolitical situation. So we had a huge spike in terms of shipping logistics, especially in Q1 in 2024. I'm sure you're aware, we -- those spikes reached sometimes to 20% higher compared to 2023. The good news is that we've been able to mitigate these COGS spikes. And we kind of offset it by the increase in volume, which was both locally and also in export businesses, as I mentioned. What we have seen also in 2024 that towards the end of the year, those logistics costs, lead time challenges, in many cases, we opted to air freight instead of sea freight because, of course, we wanted to meet our commitments and supply security promises to customers. So good news is we did not lose business, yet we maintained our pricing levels. So we did not also pass this to our customers. But we had to absorb that, I would say, temporary spike in COGS. But moving forward, I think now we're seeing things adjusting better as the geopolitical tension is easing now. And hopefully, we see a positive trend moving forward. I hope that answers your question.

Yes, partly. But just to get an idea of how these things have affected -- can you please share some insights on the volume trend? How much was it up? What was the change in volume during 2024?

So I could give you at a high level. So at integrated, we grew double digit. So let's say, I can say more than 10% in 2024. I could also share with you that Yemen market in the last 6 months of 2024 because that's where our operation became full-fledged. The volume that we sold in the last 6 months is projected to be sold in quarter one this year. So we are moving aggressively in Yemen. Of course, in Oman local market growth would be less than looking at the integrated view. And the reason for that is that in Oman, we hold more than 30% market share in Oman. So our growth in Oman, I would say, less aggressive, but more choices that we make of where to grow. And as I mentioned to you, we're looking really at penetrating the industrial sector in Oman now to support not only the -- I would say, the growth of the industrial and manufacturing sector, but also we're trying to help these businesses decarbonize and utilize our carbon neutral range.

Got it. Got it. I appreciate that. And another question is a follow-up question on the mobility side. You said you are focusing -- you'll be focusing more on V-Power. So could you please tell us how is the traction acceptance, market acceptance for V-Power in terms of volume? What's the volume growth in V-Power in 2024, '23?

That we're not only focusing on V-Power.

So 2 things, [ Joyce ] in terms of the question. In absolute terms, we grew approximately 40% increase in terms of volumes of V-Power 2024 as opposed to 2023. And that's why we are very, very excited with the consumers' belief in this premium product and recognizing that we are operating on a special additive, which no other player in the market has. Secondly, just to recap my opening here, Joyce, in terms of our growth segment, it is basically 5 segments. So it's fuel segment, it's fuel, it's V-Power plus the 91 Fuelsaves, which I was mentioning earlier. There are potentially more differentiated fuels which are coming, watch this space. Our second growth segment is on new stations to Oman. We have included one. We are soft launching another one in 4 weeks and there will be up to 3 more sites added this year. That's one piece that will move the needle hugely for Shell. And this is a stark difference compared to, say, 1.5 years ago, where we were more conservative in terms of adding new stations. The third piece on growth is on convenience retailing, which I mentioned, and [ Mana ] had questions around that. That is the other segment. The fourth is around energy transition, alternate fuels, all lower carbon fuels, which my colleague mentioned. And the fifth is around the B2B segment. So just for prosperity, the growth area is not only V-Power, it's also the 4 other segments which I mentioned.

Yes, I understand that. Just a follow-up on the [ NTI ] plants that you have. What's the CapEx that we are looking at for adding these new 5 stations?

Yes. So as a general proxy, constructing a station can cost anywhere as low as OMR 150,000, and it can go up to as high as sky is the limit. Let me leave it that way. In terms of the model, which we choose to employ, Shell is employing a hybrid model, which means that can be an ownership of the asset anywhere as low as 5% to Shell owning 100% of the asset. So we are not rigid in terms of our ownership model that will be subject to negotiation opportunities in the market. But headlining all that, it will be a function of one thing to grow ultimately Joyce, yes. So if we can find great opportunities in terms of land, in terms of active investors, in terms of operators and all of these 3 can line up, the operating model will be a resultant of the negotiation that's it. It doesn't -- Shell is flexible in terms of the model which we want to operate. The 2 things which we will not compromise on is in terms of our license to operate, that's around safety. That means we will only invest and participate in business models where we can operate these assets in a safe level, which is up to Shell standards and the other one, which is in ethically compliant way as well, yes. So I hope that answers the question, Joyce.

Yes. Yes. But when you say OMR 150,000, are you saying that this will be the CapEx for -- average CapEx per station for this year, like maybe around OMR 750,000 is what we are looking at for the [indiscernible] stations?

So I won't be able to divulge that, but suffice to say. And why in transparency, it is because as we are developing our capital investment model, we are also negotiating contracts, etcetera. So the absolute sum on how much CapEx I invest is actually fluid as I'm speaking to you, yes.

Sorry, Joyce, go ahead because I want to take you back to the first question about lubricants. But please go ahead and continue.

No, you can clarify on that. I'll wait.

No, no, no, we'll have time. Please, I don't want to interrupt your question on the floor.

The next one is on the EV charging, the hydrogen stations that you are very positive about. Could you throw some light on the revenue model that you are going to get from EV charging stations? You are planning to add around AC charging stations of around 50 during this year and DC charging stations are going to 20. So what's the number of stations that we have currently? And what's the number that you are anticipating by end of year? And what's the revenue model there? How much of revenue are we generating from these charging stations?

Right. Thanks. So I'll go through very quickly. So the number in terms of our ambition to grow up to, say, let's call it, for proxy 50 additional charge points, hybrid between our current stations and growing versus the existing footprint of about 15 charging points, which we have, north to south. The model for revenue will be dependent on the partnerships, which I was talking about a little while earlier. So I will not be able to divulge what's either in the pipeline or some which has been signed at the moment. So we'll need to go through the proper channels and await for some to actually announce them. But suffice to say, the intention to, let's say, monetize this particular segment will be highly dependent on the type of partnership deals which we signed with interested players which we currently have and are growing in the market. And by the way, this will not necessarily only be confined to EV charging cars as well. So we are also exploring other forms of e-mobility. And that, for example, could include electric motorcycles, which is something you see done actively in the UAE as well. So it's -- the reason I was trying my best to contain my excitement is because that's as much as I can reveal for now, Joyce, but please watch this segment. So EV for now, when Shell refers to it is not only containing to 4-wheel vehicles, but it's also to 2-wheelers as well. And it can be, for example, let's hypothetically say in the form of battery swapping, yes. So we are exploring all possible avenues [indiscernible] for the announcements. Hydrogen itself, this was part of Shell Group's gift to the nation, and this is done once periodically every 3 to 4 years for the Shell Group. So in full transparency, the current hydrogen unit, which is at that station nearby the airport is not intended and never was intended to generate any revenue. But aside from it being a gift to the Sultanate, it is also both Shell and the Sultanate's ambition to learn from this particular station, first of its kind for the Shell Group globally, where we are producing hydrogen on site. In other countries, for example, in Europe, hydrogen is produced outside and then delivered to the station and is commercially sold. We are learning in that sense. So I encourage the forum to actually follow through on the news coverage, including the Minister's ambition actually for this site and probably we'll be able to pick up a few more nuggets. Ideally, at the end of this project, which is maybe in a 4- to 5-year horizon, somewhere between that time after we are in a better space to say, okay, this can be commercially scalable. We want to roll it out, whether it's in the form of green or blue hydrogen to the Sultanate. And that has to be also done lastly in tender with OEMs as well, which we are yet to approach the subject in terms of scale. Joyce, I trust that answers your question.

Thank you, Suresh. Thank you very much for that clarification on hydrogen. And just continuing on this EV charging stations. Will it be possible for you to share what kind of revenue contribution are we looking at maybe 3 years down the line or even 5 years down the line?

Let me take that, Suresh. Thanks, Joyce. I think it's -- well, let's establish the facts. Today, EV is offered for free. Our motorists who basically drive EV vehicles are charging their vehicles at our stations or charging points for free. Now it has been honestly an area that most of the stakeholders here in Oman have been trying to look into to address it in the right way from one side, entice the customers to go on for EV and at the same time, encourage also the service providers to bring in equipment or invest in CapEx that will give them the return on capital employed. Now it's always when you bring in a new product or a new initiative to the market, it's always the chicken and egg. And I think I noticed that you are trying to arrive to where -- when basically or the business model that we have. Today, we're actually looking at EV as enablers for our customers to come and experience it, try it out for free and actually be encouraged. And hence, we would be sort of encouraging the growth of this segment from motorists perspective, but also an opportunity for us to grab more sort of income through the nonfuel retailing when those customers come and pass by our sites. Now is this model sustainable? I doubt because there will be a specific time where any investment companies would say, you know what, I cannot go beyond that. I can try it out for some time, but then I cannot go beyond that. It has to make a commercial sense. The question is when and how, yes. We are watching this space and see how the growth is taking or shaping in the market. And accordingly, also, we are in touch with the authorities to basically come to basically a model where it makes good sense and still encourage our customers or motorists in Oman to go for electric vehicles and at the same time, encourage us and other business partners to keep on investing and grow this in parallel. I think the business model that we have -- were able to arrive to is delivering those charges to our business partners, which has been really successful. So I think I hope that answers your question, Joyce.

That's very clear, Dr. Mohammed. And you were talking about some clarification on the lubricant business itself.

Yes. I somehow missed your first question about we haven't -- despite growing in volume, we haven't grown in profitability. Was that your question?

Revenue side -- it was on the revenue side. You are saying that the market share has increased and new markets were -- started selling to new markets. But at the same time, the revenue has been very stagnant during the year. So I just wanted to check whether the market has shrunk or was it a price issue -- pricing realization?

I think in addition to what Mohamed said, so first, let's clarify. We have grown double digit in volume. We also have grown double digit in gross profit of that specific business. So actually, the lubricant business is growing. Yes, we could have -- it could have attributed more to Shell Oman Marketing overall picture if it wasn't for the geopolitical delays and price hikes that happened, and it was impacting not only the region, but the entire globe. So just for clarification, we have grown in the profitability of the business itself, but the contribution could have been much higher if it wasn't for those scenarios. And that's what I wanted to highlight here.

I think the number that you're looking at in terms of revenue covers our lubricant business as full. So we have volumes that are for local markets, and we have those that are for exports. So what you are seeing is without breakdown, basically, you talked about not seeing much difference between year-on-year. But what Mohammed was talking about is that the increase in volumes has been, in particular, some segments like he mentioned, for example, Yemen, where the margin structure is different to the local market and the prices are a bit different. And so you might see increase in market shares in certain markets while not in others, but that will not show in the top line.

On the aviation side, are there any other -- any ATF supply contracts that are coming in for renewal in 2025? And also if you can touch upon what are the opportunities that you see in the aviation side that would be much appreciated.

Yes. Thank you. For this, we have currently Oman Air tender that is out right now. We still don't know the outcomes. So that is one thing. SalamAir will be coming by end of the year. These are the 2 local tenders. And then we have the international that keeps coming on a monthly basis or every 6 months. So we have Emirates every 6 months. So there are different airlines, different strategies they have. And we are participating in all those tenders that come out but Oman Air and SalamAir, the 2 major tenders that are coming out this year.

And Oman Air is a 3-year contract, if I'm not mistaken, right?

It's a 2-year contract.

2-year contract.

They keep on changing it. It used to be 3 years, Joyce. They keep on -- it's up to them, of course, they sometimes make it 2 months, sometimes make.

Okay. Got it. Got it. See, the next one is my last question. That's on your last year announcement of sale of assets. You're selling some logistics assets. And now looking at the value of those assets, you have ring-fenced almost OMR 4.6 million worth of assets in the balance sheet. But at the same time, in the notes when I looked at it, I'm seeing a OMR 9 million depreciation reversal as well. So the total value of the assets, what we are taking is around OMR 14 million or between OMR 14 million to OMR 15 million. So I just wonder -- I was just trying to arrive at a possible potential sale price that you probably -- Shell will be able to get from sale of these assets and the potential capital gain that you might record during the course of this year. Can you please throw some color on that? And what's the kind of revenue? Are these assets currently generating any revenue? What are the reasons that you're going for a sale of this asset? Some details on that would be much appreciated.

Sure. Thanks, Joyce. I'll probably just cover it in a high level, and then I'll ask Lamees to share more details. So the OMR 9 million you're talking about is actually covering the entire business, not only the assets, yes. So that's number one. The reason we decided to actually sell off the assets mainly because post 2016 or prior to 2016, these assets used to serve the entire country from being the source of supply or the depot for the country, and we used to run them out to the refinery. Post 2016, when the depot has moved to [indiscernible], we started actually looking at opportunities on how we can capitalize on these assets and maximize them for the best interest of some. There were ad hoc contracts here and there, while at the same time, the cost of operating and maintaining these assets were actually becoming heavier year-on-year. We tried also to look at the import/export aspects of it, and that was before the Russia-Ukraine challenges. We tried it for a couple of quarters and then that issue, the political issue got triggered between the 2 countries, and that made lots of added more complexity in terms of import/export aspects. The last few months, we have been -- or actually the last couple of years, to be honest, we have been actively looking in terms of how we can best sell these assets. And recently, we came into signing an SPA for the sale of these assets. It's, of course, conditional subject to approval of the authorities, which we are still in that phase, if you like. So that's the reason mainly. The assets was creating a cost element without necessarily a sustainable source of income. And for us, we can't just keep assets with all the costs associated with it, whether it's rent, whether it's maintenance, whether it's people, whether it's asset integrity while actually having just ad hoc contracts in place. Hence, that idea or that decision was endorsed by the Board of Directors to actually go ahead and sell those assets.

And maybe just to complement. So we say our guiding principle is to grow in profitability. But then internally within the organization, that's not the only lever that we want to focus on. We also focus on ROCE and ROCE improvement. So our return on average capital employed is tied up with the -- how much revenue or how much profitability do we actually get from the existing portfolio of assets that we have. If we look at this particular terminal, like you correctly mentioned, it's around OMR 4.6 million. It constitutes around 80% today of my overall PP&E. And tying it with everything that Mohammed just mentioned in terms of the revenue that we are getting out of it, the income that we get in addition to the operational cost, the overall equation was not starting for us. So it's just a way from the organization to liberate ourselves from that 8% of assets that are sitting on the balance sheet today from our [ PPA ] that are not yielding the returns that we are looking for, hence, the decision to dispose them [indiscernible].

And Joyce, if I may add, I think this was also -- has been looked at as a great opportunity to basically invest in our -- the activities and the growth plan that we have for the company for the next few years, yes. So ideally, we're trying to convert or basically a sleeping asset, if I may use this term, into active investments that will help us in the other activities or other classes of businesses that we do see a lot of areas to improve and growing.

Yes. One follow-up on this, just to make sure. So the total consideration is OMR 14 million, and we are likely to book a pretax profit of around OMR 9 million. Is that right?

Actually, due to compliance and competitive regulatory reasons, we cannot really now comment on the value of this transaction. The discussions are still ongoing. Negotiation is still ongoing. So we are a public listed company, so we might not be able to comment on that part right now, but watch out for the disclosures soon, Inshallah.

Sure. And will this money will be distributed to the shareholders or will you keep it for the growth projects?

That will be subject to a discussion that we will have. But definitely, we will share the outcome of this at the right time. As [indiscernible] said, there are a number of protocols that we need to hold around this time, and it's basically wait for the transaction to be completed. We do have a few scenarios that we will discuss with the Board of Directors on how to basically utilize these funds. But one of them would be -- or it could be a mix of options on how we can utilize this.

I know you have additional good questions and the team members as well who did not have chance to ask. You can always drop your questions to my e-mail in our website in the Investor Relations page, and we are happy actually to attend to your questions. But I think we have come to the end of our Investor Relations session. I would like to thank you again for the time and for the good engagement and the good questions, as I said. And we look forward to host you again in Q3 this year for our second Investor Relations session. So thank you, and have a good day.

Thank you. Bye-bye.