No DCC changes as profits rise

THE strategic review which has been ongoing at DCC for the past year will not result in any change to the structure of the support services and distribution group in the foreseeable future.

The group’s board – which yesterday announced a strong set of financial results for the 12 months to the end of March, including a 6.3% rise in profits before exceptional items were accounted for – said that, given the current market environment any material change to the structure or composition of the group at this point “would not enhance shareholder value”.

The group’s management added that its “diversified business model, strong balance sheet, financial discipline and acquisition skills have been significant factors in a robust performance and management of risk over an extended period”, but added that the structure and strategic direction of the business will be kept under periodic review, in the interests of shareholder value.

Indeed, that robust performance and acquisition skill was evident yesterday with DCC reporting pre-tax profits of €137.9 million for its latest financial year. That figure was €159.5m before exceptional items were stripped out – representing a 6.3% annual increase, or as much as a 21.3% rise if measured on a constant currency basis, ignoring exchange rate movements.

Elsewhere, group revenue was up by 15.7% on the previous year, at €6.4 billion; operating profit grew by just under 8% to €180.4m and adjusted earnings per share rose by 2.5% to 169.13c. There was also further good news for shareholders with the dividend per share rising by 10% to 62.34c. The group also managed to cut its net debt from €123.7m down to €90.7m by the end of March. As expected, it was DCC’s energy division which drove performance with a 35.5% increase in revenue to €100.7m; but there were heavy revenue falls in the areas of healthcare, environmental and food/beverage.

Group chief executive Tommy Breen said that the business would continue to grow through a mix of acquisition and organic means, adding that it was “in a strong position to benefit from acquisition and development opportunities that are likely to arise in the current environment”.

DCC’s latest acquisition – also announced yesterday – is the oil distribution business of Shell in Denmark, for which it has paid €14m. Management called the move “an initial modest step” in expanding its oil distribution business beyond Ireland and Britain.

In terms of outlook for its current year, Mr Breen said that DCC’s earnings per share would likely fall by between 5% to 10%. Operating profit will be in line – or modestly behind – the last year.

On a good day’s trading, for the ISEQ, DCC’s share price gained 1.52% (22c) to close at €14.72 yesterday.