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18 May 2021 | 07:33

DCC beats operating profit expectations as revenue declines

(Sharecast News) - DCC reported a 9.1% decline in revenue in its full-year results on Tuesday, to £13.41bn, although group adjusted operating profit rose 7.3% to £530.2m, ahead of market expectations. The FTSE 100 sales, marketing and support services company said about half of the constant currency growth in the year ended 31 March was organic.

It said all of its divisions recorded growth in operating profit, despite a challenging trading environment, with its LPG business seeing adjusted operating profit growth of 1.3% and the retail and oil operation ahead 3.3%.

Adjusted operating profit in its healthcare division rocketed 35%, while its technology unit's profit growth was 11%.

DCC said its adjusted earnings per share came in at 386.6p, representing year-on-year growth of 6.6%, while a "very strong working" capital performance resulted in free cash flow of £687.8m, up from £492.3m a year earlier, with free cash flow conversion standing at 130%.

Return on capital employed - the group's key metric - increased to 17.1% for the year, from 16.5% in the 2020 financial year.

The board proposed a 12.6% increase to the final dividend, which would see the total dividend for the year increase by 10.0% to 159.8p, marking DCC's 27th consecutive year of dividend growth.

DCC said it remained "very active" from a development perspective, having committed around £375m to acquisitions in the period, including further bolt-on acquisitions announced on Tuesday of £55m.

Each of its divisions was acquisitive during the year, including the "significant expansion" of DCC LPG's business in the United States with the acquisition of UPG, and the initial entry by DCC Healthcare into the German and Swiss primary care markets through the acquisition of Wörner.

The firm said it was also continuing to make "good progress" in enabling its customers to transition to cleaner energy, as it expanded its electric vehicle (EV) fast charging infrastructure by 50%, increased biofuel penetration to 11% of transport fuel volumes, acquired two solar businesses in France to add further capability to its platform in the market, transitioned all of its power customer base in Ireland to renewable power, and continued to convert customers to LPG.

Although the uncertainty created by the Covid-19 pandemic was ongoing, DCC said it expected that the current 2022 financial year would be another year of profit growth and development.

"A strong trading performance, excellent cash generation, very strong returns on capital employed and continued development activity are hallmarks of DCC's resilient business model," said chief executive officer Donal Murphy.

"DCC has always put sustainability at the heart of our strategy.

"During the year, we committed both to interim targets and to ultimately reach net zero emissions from the group's own operations by 2050 or sooner."

Murphy said the company remained active from a development perspective, and was ambitious to work towards being a "global leader" in its sectors.

"We continue to have the platforms, opportunities and capability to do so.

"The group is well placed to navigate the ongoing uncertainty, build on our momentum and continue DCC's growth and development into the future."

At 0813 BST, shares in DCC were up 1.75% at 6,202.85p.
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