‘Excellent’ half-year results for DCC

DCC, the sales, marketing, distribution and business support services group, said on Tuesday that operating profit in the six months to end September 2015 soared by 26.1 per cent on the back of the strong performances of DCC Energy and DCC Healthcare.

Operating profit rose to £88.4m, in the London listed company’s seasonally less significant first half of the year, while profit before tax increased by 23.1 per cent to £52.5 million. Revenues declined by 6.6 per cent to £5.1bn, reflecting the impact of lower oil prices. Adjusted earnings per share increased by 18.5 per cent to 70.3 pence. The group paid an effective tax rate of 16 per cent for the first six months of the year.

Tommy Breen, chief executive, said that the group's "very strong" performance was achieved through excellent performances from the energy, healthcare and environmental divisions, "notwithstanding a more difficult background for the technology division". Looking ahead, assuming normal winter weather conditions," the group expects that both operating profit and adjusted earnings per share for the year ending 31 March 2016 will be very significantly ahead of the prior year and modestly ahead of current market consensus expectations," Mr Breen said.

Of the potential risk posed to the group by a UK exit from the European Union, Mr Breen told Bloomberg TV that he doesn’t see the risk as “material”.

In Ireland, DCC’s technology business reported “strong growth”, benefiting from improved demand, while DCC Environmental performed “very strongly”, increasing its operating profit by 20 per cent to £8.5 million, partly driven by the improving economic environment in Ireland.

DCC will pay an interim dividend of 33.04 pence per share, up by 15 per cent on the prior year.

In a note, Davy Stockbrokers said it was an “excellent” set of interims, with group earnings, cash flow and the dividend all surprising positively.

“Strength in the energy and healthcare divisions has more than compensated softness in technology,” the broker said, adding that it is upgrading its EPS by 5 per cent for FY 2017 and raising its price target from £65 to £68.