The plummeting value of brent crude wasn't all bad for Irish distributor DCC (DCC). True, it sent fuel distribution revenues spiralling as average selling prices per litre fell by nearly a fifth. But it also made energy more affordable for customers, many of whom continued to turn to higher-margin, greener liquefied petroleum gas (LPG).
The upshot was that adjusted operating profit in DCC's core energy unit leapt by two-thirds to £53m. Half of the growth was generated by three recent acquisitions: Esso Retail France, DLG and French LPG giant Butagaz. This strong progress prompted management to predict "significant" earnings growth in the year to March 2016 - provided the currently mild British winter eventually turns cold, that is.
Group profits also received a boost from DCC's management of its healthcare arm. By selling more hospital injectibles and switching some tablet manufacture from Sweden to the UK, operating margins there widened 1 percentage point to 7.7 per cent. That took some of the sting out of a poor performance from the technology segment, where adjusted operating profits fell 44 per cent to £8.6m. Chief executive Tommy Breen blamed a lack of major new product releases as well as flagging sales at a large UK supplier.
Broker JPMorgan Cazenove expects adjusted EPS of 255p in the year to March 2016, rising to 282p in FY2017.
| DCC (DCC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 5,655p | MARKET VALUE: | £5.0bn | |
| TOUCH: | 5,640-5,655p | 12-MONTH HIGH: | 5,655p | LOW: 3,294p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 1,335p* | NET DEBT: | 14%† | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 5.4 | 42.6 | 45.3 | 28.73 |
| 2015 | 5.1 | 52.5 | 47.3 | 33.04 |
| % change | -7 | +23 | +5 | +15 |
Ex-div: 19 Nov Payment: 7 Dec *Includes intangible assets of £1.1bn, or 1,262p a share †Adjusting for the cash cost of the Butagaz acquisition on 2 Nov | ||||
