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DCC's resilient growth

The pan-sector distributor has again put up a strong set of full-year earnings figures
May 14, 2019

As equities shake under trade war rhetoric, whither the international sales and marketing conglomerate? All in good shape, apparently, if that conglomerate happens to be DCC (DCC). Results for the year to March 2019 showed double-digit increases in adjusted operating profit for each of the Dublin-headquartered group’s four divisions, strong free cash flow, and another 17 per cent return on capital employed. This year, further profit growth and development is expected.

IC TIP: Buy at 6,692p

Trade war fears are only likely to pose a threat to DCC if the prices of the sticky products and commodities it sells start to get out of hand. Rather than import or export, the group buys in the same markets it sells in.

“There’s an awful lot of resilience in our business,” chief executive Donal Murphy suggested to us, pointing to the group’s higher gearing to business – rather than economic – cycles. DCC has found several such cycles to invest in. These numbers arrived with news of £90m-worth of new deals, including a liquefied petroleum gas distributor in the north-west US and two European audio-visual and IT distributors.

Following these numbers, brokerage Davy upgraded its EPS forecasts to 368p for the year to March 2020, rising to 376p in FY2021.

DCC GROUP (DCC)   
ORD PRICE:6,692pMARKET VALUE:£6.58bn
TOUCH:6,692-6,694p12-MONTH HIGH:7,585pLOW: 5,555p
DIVIDEND YIELD:2.1%PE RATIO:24
NET ASSET VALUE:2,433p*NET DEBT:£18.4m
Year to 31 MarTurnover (£bn)   Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201510.616315384.50
201610.420319097.20
201712.3248227112.00
2018 (restated)13.1260259122.98
201915.2327280138.35
% change+16+26+8+12
Ex-div:23 May   
Payment:18 Jul   
*Includes intangible assets of £2.07bn, or 2,106p a share.