DCC (DCC) likes to do deals. Since listing in 1994, it has built its sprawling energy, technology, pharma and medical product distribution empire through more than 200 acquisitions. In value terms, this year is set to be another blockbuster – even if no more deals are announced before March, the £550m of cash committed to takeovers will be a record.
By then, the group expects to have completed the acquisition of Shell’s LPG business in Hong Kong and Macau. A further commitment to the propane market was underlined a week before publication of half-year numbers, when DCC announced the $200m (£152m) purchase of Retail West from NGL Energy Partners – the company’s first step into the fragmented North American LPG market. “It’s definitely a foothold,” recently installed chief executive Donal Murphy told us. “We’d be extremely disappointed if we couldn’t build a bigger base there.”
DCC has the finances to back up this ambition. Despite £66m of dividend payments and a £33m free cash outflow caused by a seasonal negative working capital movement, net debt fell 8 per cent during the period. Assuming no further deals, that position should improve further in the second half of the year, when more than two-thirds of pre-tax profits are typically booked.
Following these numbers, Peel Hunt upgraded adjusted pre-tax profit and EPS forecasts to £346m and 310p for the year to March 2018, against £314m and 285p in 2017.
| DCC (DCC) | ||||
| ORD PRICE: | 7,300p | MARKET VALUE: | £6.51bn | |
| TOUCH: | 7,295-7,305p | 12-MONTH HIGH: | 7,595p | LOW: 5,780p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 1,722p* | NET DEBT: | 7% | |
| Half-year to 30 Sep | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 5.51 | 70.1 | 74.0 | 37.2 |
| 2017 | 6.45 | 73.3 | 99.7 | 40.9 |
| % change | +17 | +5 | +35 | +10 |
| Ex-div: | 23 Nov | |||
| Payment: | 11 Dec | |||
| *Includes intangible assets of £1.48bn, or 1,657p a share. | ||||
