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DCC looks to North America

The Irish conglomerate is trading in line with expectations, but interest will build in North American expansion
November 13, 2018

In an age of specialism, the industrial conglomerate must seem an outmoded concept, but broad-based exposure has its advantages. Ireland’s DCC (DCC) has seen a marked step-up in liquefied petroleum gas (LPG)  volumes following deals to acquire Shell Hong Kong & Macau, Retail West and TEGA. But the 14.9 per cent increase didn’t translate into an improvement in adjusted segmental profit at the half-year, as margins were held in check through underlying commodity price increases and investments in the natural gas and power offering in France. The resultant 7.2 per cent decline in LPG operating profit came as no surprise, but the effect on group performance was mitigated by double-digit growth in the group’s other business units, with DCC Retail & Oil the star performer, registering a 33.5 per cent increase in adjusted operating profit to £56.3m.

IC TIP: Hold at 6190p

This broad-based exposure has an expanding geographic element, with DCC Technology making its initial foray into North American markets through deals to acquire Stampede Global Holdings Inc, a specialist distributor of professional audio-visual products, and the Jam Group of Companies, an audio sales and marketing business.

Goodbody Securities gives EPS of 342p for the March 2019 year-end, rising to 366p in FY2020.      

DCC (DCC)    
ORD PRICE:6,190pMARKET VALUE:£6.08bn
TOUCH:6,185-6,195p12-MONTH HIGH:7,760pLOW: 6,005p
DIVIDEND YIELD:2.1%PE RATIO:23
NET ASSET VALUE:1,731p*NET DEBT:48%
Half-year to 30 SepTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2017 (restated)5.9573.365.440.89
20187.4285.976.244.98
% change+25+17+17+10
Ex-div:22 Nov   
Payment:12 Dec   
*Includes intangible assets of £2.14bn, or 2,176p a share