Sunday 18 March 2018

'Merc' of quality behind success story

IF energy and computer distribution conglomerate DCC were a car, it would be a Mercedes Benz -- or another reliable model that doesn't excite the critics but keeps on producing the goods long after flashier marques have been sent to the wrecker's yard.

There are more profitable companies on the stock exchange but since the collapse of the banks, it is impossible to name a company which has posted a steadier increase in earnings over the years and survived the last two recessions with such aplomb.

The company's 2010 results, released yesterday, are no exception and show that DCC has the power to grind out profit increases through thick and thin.

Adjusted earnings per share over the past 10 years have now increased by an average of 10.6pc a year, while the dividend has been hiked by an average of 14.4pc each year over the same period.

Neither the recent recession in the company's two major markets nor the very public investigations into founder Jim Flavin's decision to sell a stake in Fyffes have led the company to miss a beat.

DCC still distributes a bewildering variety of household items from KP Nuts to Nintendo computer games but the real profit comes from just two divisions which together account for four-fifths of its profits.

Those divisions are the energy unit, which sells oil to consumers in four countries, and the IT division, which distributes consumer electronics and peripherals such as those useful bits and pieces made by companies such as Logitech and IBM.

It seems likely that DCC will eventually come up against competition issues in the UK and Ireland but the company's initial forays into Austria and Denmark appear to be going well and offer large scope to chief executive Tommy Breen as he looks for ways to repeat the company's exploits in the years ahead.

The good news for the rest of the population is that Breen believes the worst is over for the economy and even sees some signs of 'green shoots' emerging.

Few chief executives are better placed to test the economy's temperature these days, so his comments that DCC does not see things getting worse can offer some consolation to the rest of the country as we battle to return to the sort of steady growth that DCC has posted for many years now.

Irish Independent

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