Sales, marketing and support services group DCC saw its profit after tax slip almost 4 per cent in the first half of its financial year following declines in its healthcare and technology divisions.
The group, which published interim results for the six months ended September 30th on Tuesday, made a profit of £101.4 million (€116.4 million) in the period, which was down from £105.2 million in the same period the year before.
Group adjusted operating profit, which excludes net exceptionals and amortisation of intangible assets, was up 12 per cent from £221.2 million to £247.6 million in what the company said was “the seasonally less significant” first half of the year.
Group revenue decreased by 11.3 per cent to £9.6 billion, primarily due to lower revenue in DCC Energy where average commodity prices were lower than during the first six months of the prior year.
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“DCC continues to expect that the year ending March 31st, 2024, will be another year of operating profit growth in line with expectations, and continued development activity,” the company told investors.
The company increased its interim dividend by 5 per cent to 63.04 pence per share.
Within the constant currency growth of 12.2 per cent, organic growth was 4.4 per cent driven by “an excellent performance” from DCC Energy and partially offset by a decline in both DCC Healthcare and DCC Technology.
DCC Energy reported an operating profit of £170.6 million, which was up almost 29 per cent on the £132.5 million it generated in the same period last year.
Operating profits at DCC Healthcare fell by 11.3 per cent to £38.3 million from £43.2 million, while operating profit at DCC Technology was 15 per cent lower at £38.7 million, down from £45.5 million.
The company said the inflationary environment “continued to be a significant feature” during the period. The organic profit growth was achieved despite a 5.3 per cent, or about £50 million, increase in the group’s like-for-like overhead cost base.
In Britain and Ireland, volume and operating profit was in line with the prior year, but the company noted the economic environment in the UK was less favourable.
DCC chief executive Donal Murphy said: “We delivered strong profit growth in the first half of our financial year. Although the macro environment remains volatile, DCC continued to perform thanks to our resilient and diverse business.”
An analyst with Davy said the company’s results showed “strong growth” in earnings before interest, taxes, and amortization and “further growth” in adjusted earnings per share.
DCC Energy separately announced the acquisition of Progas, a leading distributor of liquefied petroleum gas (LPG) in Germany.
The acquisition is based on an enterprise value of approximately £160 million on a cash-free, debt-free basis and the consideration will be settled in cash on completion.
It is expected to generate a mid-teen return on capital employed in the first year of ownership and the deal is expected to complete by the end of the financial year.
It represents DCC Energy’s largest acquisition to date in Germany and considerably expands its customer base in Germany to over 100,000 customers. Progas, founded in 1949, serves a base of over 70,000 domestic and commercial customers.
Progas distributes the equivalent of approximately 330 million litres of LPG annually via its nationwide supply, filling and distribution network and employs approximately 350 people. Its management team will continue to lead the business from its headquarters in Dortmund.
