17th May 2016 10:53
LONDON (Alliance News) - Irish distribution and outsourcing group DCC PLC on Tuesday outpaced market expectations for its financial year to the end of March, delivering higher profit and revenue and hiking its dividend while pointing to another year of progress ahead.
DCC, which joined the FTSE 100 in December, was hovering among the best performers in the blue-chip index late morning on Tuesday, up 4.3% to 6,415.00 pence. In the past 12 months, shares in the company are up 47%, including Tuesday's gains.
Pretax profit for the year to the end of March grew 47% year-on-year to GBP216.3 million, from GBP147.1 million a year earlier. Operating profit increased to GBP300.5 million from GBP221.7 million, up 36% year-on-year and well ahead of the GBP296.0 million consensus estimates ahead of the results.
Adjusted earnings per share rose over 27% to 257.1 pence in the year to the end of March from 202.2p in the previous year. This easily beat analysts expectations of 251.0p.
Thanks to the growth in profit, DCC declared a final dividend of 64.18 pence, up 15% year-on-year, taking its total payout up to 97.22p, also up 15% on the payout in the previous year.
The growth in profit was driven by DCC Energy, the group's fuel-delivery business which last year grew substantially with the acquisition of French liquefied petroleum gas company Butagaz SAS. Butagaz, which operates in the liquefied petroleum gas cylinder and small bulk market segments, significantly increased the size of DCC's existing liquefied petroleum gas business to around 1.2 million tonnes from 700,000 tonnes.
The growth of the Energy business meant operating profit for the division grew 72% year-on-year. This was complemented by 14% operating profit growth for the Healthcare and Environmental divisions, which offset a 29% decline in operating profit in DCC's Technology unit.
DCC's revenue for the full year, however, was broadly flat year-on-year at GBP10.60 billion. While volumes for DCC Energy grew 19%, thanks to the first contribution from the Esso unmanned and motorway retail petrol station network in France, like-for-like revenue was slightly lower due to milder winter weather conditions. Overall revenue declined 1.4% as average selling prices per litre fell 17% due to the lower world oil price.
Beyond the Energy arm, DCC Healthcare - which distributes pharmaceuticals and medical devices to hospitals, pharmacies and GPs along with health and beauty products to retailers - benefited from good organic growth plus an improved sales mix and good cost control at DCC Vital, which distributes products to hospitals, GPs and pharmacies.
The Environmental business, which provides recycling and waste management services, had a good year, helped by strong organic growth, but the Technology revenue decline was driven by a weak performance in the UK, where sales were hit by a reduction in orders from one large supplier and weaker-than-anticipated demand for tablet computers, smartphones and gaming products.
Free cash flow for DCC, a key measure given the importance of acquisitions to its growth outlook, came in well ahead of expectations too at GBP291.1 million. Berenberg had estimated free cash flow of GBP230.0 million.
Tommy Breen, DCC's chief executive, noted the strong cash generation performance and said the group had converted 97% of operating profit to free cash flow. This helped DCC's return on capital employed rise to 21.0% for the year, from 18.9% a year earlier.
DCC said it anticipates the current financial year will mark another period of profit growth and development for the business, and Breen said the company's "modest" net debt position of GBP54.5 million at the end of March, coupled with its "strong and liquid balance sheet" will provide "significant financial capacity for further development."
By Sam Unsted; [email protected]; @SamUAtAlliance and Joshua Warner; [email protected]; @JoshAlliance
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