DCC flat de­spite re­sults

Irish Examiner - - Business - Geoff Per­ci­val

DCC shares per­formed slug­gishly de­spite the group re­port­ing a strong per­for­mance for its sea­son­ally less im­por­tant first half. The com­pany says it re­mains on course for an­other full year of profit growth.

The Dublin-based sup­port ser­vices group re­ported a 14.4% year-on-year in­crease in ad­justed op­er­at­ing profit — for the six months to the end of Septem­ber — to £122.5m (€137m), with rev­enue ahead by 16.4% at €1.62bn.

Ad­justed earn­ings per share were up 16% at 95.5p and the group in­creased its in­terim div­i­dend, for share­hold­ers, by 10% to 40.89p.

The core DCC liq­uid petroleum gas di­vi­sion re­ported rev­enue of $502m, 36.5% ahead on a year-on-year ba­sis. Rev­enue in the re­tail and oil di­vi­sion which has also ben­e­fited from big ac­qui­si­tions rose 15.5% to £4.3bn, with op­er­at­ing profit up 8% at £42.2m.

The tech­nol­ogy arm, again driven by ac­qui­si­tions, saw near 20% rev­enue growth, while prof­its rose nearly 26%.

“The busi­ness has per­formed strongly, with each of our di­vi­sions record­ing good growth, al­beit in the sea­son­ally less sig­nif­i­cant first half of the year,” said group chief ex­ec­u­tive Donal Mur­phy.

DCC’s share price is up nearly 20% to date this year. It was marginally down, by around 1.4% for much of yes­ter­day be­fore clos­ing up nearly 1% de­spite the good re­sults.

Nev­er­the­less, Davy has upped its price tar­get for the stock to £82.50. It is cur­rently trad­ing around £72.

Mer­rion says it feels the DCC stock is fully val­ued at the mo­ment and re­it­er­ated its ‘hold’ rec­om­men­da­tion.

DCC’s first half typ­i­cally ac­counts for just around 30% of its full-year group earn­ings be­fore in­ter­est, tax and amor­ti­sa­tion.

The group has com­mit­ted around £550m on ac­qui­si­tion spend since the start of 2017, ex­pand­ing its pres­ence out­side Europe and into Asia and the US.

Last week’s agree­ment to buy US fu­els busi­ness Re­tail West is likely to give it a ready­made, mar­ket-lead­ing po­si­tion in the fu­els dis­tri­bu­tion busi­ness in much of the US and man­age­ment is hun­gry for more.

“The group con­tin­ues to have the am­bi­tion and ca­pac­ity for fur­ther de­vel­op­ment and, im­por­tantly, as DCC in­creases in scale and ge­o­graphic reach, also has the op­por­tu­nity to build sub­stan­tial mar­ket po­si­tions in its cho­sen sec­tors,” said Mr Mur­phy.

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