DCC’s energy business fuels 35.5% operating profit growth

DCC said its operating profit rose 35.5 per cent to £300.5 million (€384.7 million), the fastest pace in two decades, driven by its energy business as it integrated its two largest ever acquisitions.

The international sales, marketing, distribution and business support services conglomerate s proposing a 15 per cent increase in dividends to 97.22 pence per share, it said in its full-year earnings statement.

DCC chief executive Tommy Breen is forecasting its current financial year will be “another year of profit growth and development for the group.”

Last year saw DCC acquire the French liquefied petroleum gas (LPG) business Butagaz in a £319 million deal. It also purchased Esso’s unmanned and motorway retail petrol station network in France for €122 million.

The two businesses are trading well according to Mr Breen.

Responding to a question from analysts on a conference call on the prospect of DCC expanding beyond Europe, Mr Breen said, in time, “I think we will be in other markets.” He declined to put a timeframe on it, but said the company is keeping an eye on potential acquisitions, particularly in the energy sector.

“We’ve already started seeing opportunities elsewhere,” said Mr Breen. “We’ll wait until the time is right.”

He said that there were still “plenty” of potential deals in Europe.

Davy analyst Allan Smylie said DCC has “substantial financial capacity” for further acquistions, as its net debt stood at £55 million at the end of March. He raised his price target for the company’s shares to £72 from £68.

Sharesin the company have soared 41 per cent inthe past year to £61.50.

“Full year 2016 close a milestone year for the DCC group,” said Mr Smylie. “Despite a record level of acquisition spend, underlying return on capital employed has been maintained at 19 per cent, which we think is a very strong achievement.”