DCC (DCC) reports that its French affair has entered another chapter through a deal to acquire Gaz Européen, a Paris-based natural gas company, for an initial consideration of €110m (£96m). The news accompanied another solid set of returns for the Irish distribution and marketing group, with half-year operating profits up 35 per cent to £95.1m and cash flow up 17 per cent to £141m.
Gaz Européen will be DCC Energy's first major foray into the natural gas market and will complement the activities of Butagaz, its French LPG subsidiary acquired from Shell in the third quarter of 2015. The division also completed the acquisition of Dansk Fuels, announced in March 2016, ahead of schedule. Overall, the group spent £180.5m on acquisitions during the period, including Medisource, an Irish pharmaceutical sales business, and Medium, which distributes audio visual equipment in the UK.
An investment point worth considering is that despite the fact that DCC has made dozens of acquisitions as a publicly traded entity, it has only gone cap-in-hand to shareholders once - and even then the stock was only diluted by around 5 per cent. In other words, it is funding its growth in-house; even with the €464m price tag for the Butagaz, net debt stood at a more than manageable £112m at the period end.
JPMorgan Cazenove expects adjusted profits of £325m for the March 2017 year-end, leading to EPS of 297p, rising to £350m and 320p in the following year.
| DCC (DCC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 6,505p | MARKET VALUE: | £5.78bn | |
| TOUCH: | 6,500p-6,510p | 12-MONTH HIGH: | 7,260p | LOW: 4,654p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 1,542p* | NET DEBT: | 8% | |
| Half-year to 30 Sept | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 5.07 | 52.5 | 47.3 | 33.04 |
| 2016 | 5.60 | 80.6 | 74.0 | 37.17 |
| % change | +10 | +54 | +56 | +13 |
Ex-div:24 Nov Payment:12 Dec *Includes intangible assets of £1.3bn, or 1,515p a share. | ||||
