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Dixons Carphone storms ahead

Dixons Carphone is navigating a tricky consumer environment while simultaneously pulling off a high-profile merger.
December 16, 2015

Dixons Carphone (DC.) chief financial officer Humphrey Singer says it's "too soon" to update investors on how the group fared during the all-important Black Friday, Cyber Monday and festive trading period. He said sales of white goods were strong during the nationwide promotional bonanza in November, but the company expects a second sales spike with the launch of the Boxing Day sales. Just now, the group is "in a quiet valley" before last-minute shoppers push sales up right before Christmas Day.

IC TIP: Buy at 487p

But any surge from festive trading doesn't affect the latest set of interim figures, which run up until the end of October. During the six-month period group like-for-like sales grew 5 per cent, following a particularly strong second quarter, especially in the UK. Revenue across the UK and Ireland rose 7 per cent on a like-for-like basis, thanks in particular to strong sales in the mobile business, which benefited from the closure of Phones 4u.

Southern Europe also did well, with sales growing 4 per cent on a like-for-like basis and 7 per cent in the second quarter alone. Business in the Nordics didn’t fare badly, considering the competitive environment and pricing pressure, but the fall in the Norwegian krone relative to sterling left total first-half revenues down 11 per cent at £1.20bn. On a pro-forma basis and in local currency, sales there rose 2 per cent, or 1 per cent on a like-for-like basis.

Dixons is finishing off the Carphone Warehouse integration, as well as concentrating on its US partnership with telecoms group Sprint. Chief executive Sebastian James said the "majority of difficult decisions" regarding the Carphone Warehouse merger had been made, with head offices now fully combined. Meanwhile the "rapid roll-out" of the Sprint trial is said to be yielding "excellent results". A decision on accelerating a wider US roll-out will be made in early 2016.

Brokerage Investec expects pre-tax profits of £445m for the year ending April 2016, giving EPS of 28.5p, compared to £381m and 25p in FY2015.

 

DIXONS CARPHONE (DC)
ORD PRICE:487pMARKET VALUE:£5.61bn
TOUCH:487-488p12-MONTH HIGH:500pLOW: 399p
DIVIDEND YIELD:1.9%PE RATIO:24
NET ASSET VALUE:235p*NET DEBT:14%

Half-year to 31 OctTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20143.0716.62.5
20154.4784.83.3
% change+45+10-27+30

Ex-div: 31 Dec

Payment: 22 Jan

*Includes intangible assets of £3.43bn, or 298p a share