Flogas owner DCC eyes better-than-expected annual profit

Flogas owner DCC expects a further year of strong profit growth.

Shares in DCC rose as the Irish fuel-to-healthcare conglomerate said it expects to post better-than-expected operating profit growth for its current financial year.

The Flogas owner - which, last month, agreed to acquire home heating provider Campus Oil Ireland - said it expects to report operating profit, for the 12 months to the end of March, ahead of current market consensus expectations.

In a trading update, the group said operating profit for its third quarter – the three months to the end of December – was “strongly ahead” of the prior year, despite disruption and uncertainty caused by the ongoing Covid crisis. 

DCC said profit was strong both organically and due to acquisition contribution.

The group's shares rose by as much as almost 2% on the back of the latest trading update.

Current market consensus is for DCC to post annual earnings of around £490m (€555m). DCC shares are currently trading at around £58. However, Davy has a price target of £88 on the stock, implying 50% upside potential.

"DCC is now on track to deliver operating profit growth for [the year], a stunning achievement given the market backdrop. This, again, underpins the immense resilience of DCC’s diverse business model, with all divisions delivering organic profit growth through the third quarter," said Davy analyst Allan Smylie.