Sunday 21 January 2018

DCC sees sales growth in all of its five divisions

DCC Chief Executive Tommy Breen
DCC Chief Executive Tommy Breen
Sarah McCabe

Sarah McCabe

DCC has reported a healthy set of annual results, boosted by a surge in smartphone sales and the acquisition of UK business Kent Pharma.

The conglomerate generated revenues of £11.2bn (€13.8bn) in the 12 months to the end of March, a 6pc rise on the year before, despite a warm winter which hurt its energy division. Unusually, all five of its core activities reported growth.

Revenue from its energy business rose by 4pc, a slower pace than elsewhere in the company.

Energy is DCC's single biggest source of profit, accounting for about 50pc of all activities.

Mild weather conditions across northern Europe at the start of the year, when average temperatures were well above the 10-year average, hurt consumer demand.

Energy acquisitions during the year included Scandinavian unmanned petrol station business QStar, which gives DCC control of 300 garages across Sweden.

The company's healthcare division – which includes cosmetics manufacturing and medical device businesses – was its best performing sector, with operating profit up 37pc.

The acquisition of UK-based generic drug distributor Kent Pharma in February 2013 contributed to growth.

Revenue also soared in its technology division, the company's second biggest profit source. Sales were up 16pc on the back of a surge in smartphone and tablet sales. It now controls 30pc of all distribution of these products in the UK, and says it is the number one or number two player in Ireland, where market position is harder to calculate.

Calling the figures "another solid set of results", Davy stockbrokers said they "clearly demonstrate the benefits of its diversified business model".

This growth is expected to continue. DCC anticipates that its operating profit will be approximately 10pc ahead in 2015.

The company built up its war chest for acquisition during the year, chief executive Tommy Breen added, raising $750m in debt financing through private placements in the US.

DCC's board has now proposed a 10pc increase in the final dividend to give a total full year dividend of 76.85 pence.

Stockbrokers Davy said the company had delivered another solid set of results "which clearly demonstrate the benefits of its diversified business model."

Goodbody hailed its outperformance and said it was broad based, with all divisions coming in ahead of expectations.

"Management has guided for 10pc operating profit growth for FY15 equivalent to c.£230m," said analyst David O'Brien.

"However, given the strength of of DCC's organic performance in the FY14 and apparent momentum in the business we believe that there may be upside to this guidance.

"Overall, this is a strong set of results with earnings ahead of forecast, strong dividend growth, a significant debt raising and upside to forecasts."

Shares in the company were up more than 7pc by lunchtime yesterday.

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