DCC picks ex-banker Mark Breuer as chairman as profits top estimates

Dublin-based conglomerate hikes annual dividend by 10%

DCC chief executive Donal Murphy

DCC chief executive Donal Murphy

 

DCC said on Tuesday that it has picked British former investment banker Mark Breuer as its next chairman, as the Dublin-based fuel-distribution-healthcare conglomerate reported better than expected earnings and hiked its annual dividend by 10 per cent.

Mr Breuer, who joined the board in 2018 after more than 30 years in investment banking, most recently with JP Morgan, will replace current chairman, former Glanbia managing director John Moloney, after DCC’s annual general meeting in July.

The FTSE-100 company said that its adjusted operating profit rose by 7.3 per cent to £530.2 million (€605 million) in its financial year to the end of March, which was £15 million ahead of consensus expectations of analysts.

Profit

The group’s liquefied petroleum gas (LPG) division, its biggest unit, delivered a 1.3 per cent increase in operating profit to £231.3 million, with weak trading in the first half of its financial year as a result of Covid-19 followed by a recovery as it benefitted a gradual easing of pandemic restrictions, and acquisitions.

DCC Retail & Oil delivered 3.3 per cent profit growth to £144.8 million, even though its sales volumes dropped 12.3 per cent as a result of travel restrictions internationally.

The unit continued to develop its fuel retail site network, increasing its in-store, non-fuel sales in the UK and fully integrating 22 former Tesco petrol stations that were bought in the Republic in early 2020.

Group chief executive Donal Murphy told The Irish Times that the company’s Irish filling stations business, spanning 41 Certas and Emo sites, is still at an “early stage” of developing fast-charging points for electric vehicles, compared to its most advance market in Norway.

DCC Healthcare saw earnings jump 35 per cent to £81.7 million, with its outsourcing unit that is used by international nutrition and beauty brand owners benefitting from expansion in the US. Its sales and marketing business for medical products was helped by pandemic-fuelled demand for personal protection equipment (PPE) and intensive care unit-related devices, even as general activity in the UK and Irish healthcare systems was “significantly impacted” by the pandemic.

DCC Technology profits advanced 11 per cent to £72.4 million, as households upped spending on consumer electronics and working-from-home technology, even as its business-focused sales were hit.

The group plans to pay out a 107.85p final dividend, bringing its dividend for the full year to 159.8p, marking a 10 per cent increase on the previous financial year.

Acquisitions

DCC committed £375 million to acquisitions in the period, including further bolt-on acquisitions announced on Tuesday of £55 million. Mr Murphy said he would be “disappointed” if the company did not spend a further £300 million to £400 million on acquisitions in its current financial year.

Turning to outlook, DCC said: “Although the uncertainty created by the Covid-19 pandemic continues, DCC expects that the year ending March 31st, 2022 will be another year of profit growth and development.”

“DCC has now delivered earnings growth through every major global recession since IPO, underpinning the incredible resilience of the business model,” said Davy analyst Allan Smylie, referring to the company’s initial public offering and stock market flotation in 1994.