DCC achieves 16th consecutive year of growth as cold winter lifts profits
INDUSTRIAL conglomerate DCC posted its 16th consecutive year of growth yesterday as profit rose at its heating oil and computer divisions, which account for 80pc of earnings.
The Dublin-based group said operating profit was up 6.9pc to €192.8m in the 12 months to March 31.
The increase was flattered a little by the cold winter, but the percentage increase would have been almost double the recorded rate if sterling, where the company makes two-thirds of its profits, had not fallen against the euro. Sales rose 5.1pc to €6.73bn following a 7pc increase in energy sales to €4.42bn and a 4.3pc increase in IT sales to €1.62bn.
Chief executive Tommy Breen said there were signs the economy had stabilised, while the recent decline of the euro against the pound was likely to boost profit and sales "for once" this year. Mr Breen sees profits rising 5pc in 2011, excluding any currency fluctuations. He noted the company's profits had risen every year.
"This is not a bounce-back story," he told reporters with evident relish yesterday.
DCC has the capacity to pursue an increasing number of acquisition opportunities and would focus on enhancing its position as Britain's leading oil distributor by securing 20pc of the market, the chief executive added.
DCC has expanded through a series of small and medium-sized bolt-on acquisitions and recently moved into Denmark and Austria's energy markets.
The group said two-thirds of earnings growth last year was acquisition-driven and added it has since spent €15m on another medium-sized British oil distribution business.
Elsewhere, DCC saw operating profit rise by 26pc in its healthcare division. Operating profit at the waste unit fell 9.1pc as the collapse of the building trade here curbed the amount thrown away.
Profit at the food and beverage unit tumbled 30pc as consumers cut back on luxury goods, including Bollinger champagne, as well as health foods such as Kelkin oats and orange juice.
"The earnings momentum, positive out-performance by each operating division and prospect of further upgrades from acquisitions demonstrate the strength of DCC's business model," Goodbody Stockbrokers analyst Dan Cavanagh wrote in a note yesterday. He raised his 12-month share-price estimate to €23.30 from €22.
The company recently raised the equivalent of €284m in five, seven, 10 and 12-year funding in the US, a move that was made easier by the improving sentiment towards Ireland overseas, Mr Breen added.