DCC weathers storm as profits rise 15.5pc
Investors to get record dividend of 74.1c per share, up 10pc over the previous year
Published 11/05/2011 | 05:00
LAST year's harsh winter was good news for DCC, helping to lift profits at the Irish conglomerate by 15.5pc and giving investors a record dividend.
Preliminary results for the year to the end of March 2011 published yesterday showed revenue across the group rose to €8.6bn -- up almost 30pc over the previous year. Operating profits hit €230m for the year, up 19pc.
The company plans to continue on the acquisition trail this year, targeting takeovers in the energy, healthcare and IT sectors both at home and abroad.
DCC operates through five main divisions focused on the energy, food and drink, healthcare and environment sectors, as well as the SerCom unit. Higher pretax profits boosted DCC's 2011 dividend to 74.1c per share, up 10pc over the previous year. The dividend is DCC's highest and marks the 17th straight year making a return to investors.
Profits at the Dublin-based conglomerate were boosted by higher demand for home heating oil as a result of the unusually harsh winter in its key UK market.
However, this year's outlook is for less robust growth, according to CEO Tommy Breen. Shares in DCC were unchanged at €22.25 each, with the annual results in line with analyst expectations.
Yesterday's closing share price means the company is valued at €1.8bn.
Shares fell after Breen said an expected return to more normal weather patterns coupled with the effects of austerity measures by the UK government, would impact on growth in the UK, which is DCC's biggest market.
The harsh winter had such a big impact on the overall numbers because DCC's energy business accounts for over half of all profits, 80pc of which comes from the UK. DCC operates through five divisions in sectors as diverse as heating oil, ink cartridges and YR sauce.
The latest results show the UK accounting for 70pc of the group's profits -- making sterling/euro volatility a particular concern.
DCC said a 3pc weakening of sterling against the euro over the current year would result in only a modest decline in earnings.
However, DCC boss Tommy Breen said the company did not try to predict movements in currency or commodity prices in outlining its prospects for the year ahead.
At year end DCC had net debt of just €45m, according to the latest accounts and with free cash flow of €123.6m.
The company said its strong balance sheet means it is well positioned to continue its programme of bolt on acquisitions. DCC spent around €130m buying businesses last year. That was down from €150m/€160m in other recent years.
In March DCC agreed a €17.5m deal to buy UK office supplies distributor Advent Data, its second UK takeover of the year so far.
In February the energy division paid €27.7m to buy Pace Fuelcare in an all-cash deal.
The Pace deal gives DCC a 15pc share of the UK home heating market, which it wants to lift to 20pc through further acquisitions.