DCC declines to give financial guidance amid Covid-19 uncertainty

Energy and services firm says revenue fell marginally for financial year to end of March

DCC chief executive Donal Murphy said the company remains active on the mergers and acquisitions front.

DCC chief executive Donal Murphy said the company remains active on the mergers and acquisitions front.

 

Diversified Irish energy and services group DCC is refraining from giving guidance on trading for the coming year, given the difficulty of forecasting in the current environment, the company’s boss said after it posted a slight dip in revenue for its financial year, which runs to the end of March.

Dublin-headquartered and London-listed DCC said on Tuesday that revenue for the 12 months to the end of March fell 3.1 per cent to £14.75 billion (€16.5 billion) while its adjusted operating profit rose 7.3 per cent to £494.3 million. Profit before tax fell from £327 million to £311.5 million, however.

DCC chief executive Donal Murphy said: “The really comforting thing for business like DCC is that we are operating in essential products and services and everything we sell is required by our customers for everyday life, be it in healthcare or technology, so all our businesses are operating in every market we’re in,” Mr Murphy told The Irish Times.

Through its four divisions, DCC sells oil, beauty products, technology solutions and LPG through brands such as Flo Gas.

In the first six weeks of its new financial year, the company has seen robust trading. However, in its LPG division, volumes were impacted by warm weather conditions and trading was behind the prior year.

In its retail and oil divisions, DCC saw a significant fall in transport fuel demand in the second half of March and into April, but demand has since begun to increase. DCC technology has also been trading behind where it was last year. The company’s healthcare arm was the outlier, trading “strongly” in the first six weeks, “well ahead of the prior year”.

The company noted that its profits are “significantly weighted towards the second half of the financial year and so the first quarter is typically a modest contributor to the group’s annual profits”.

Acquisitions

The financial year was an active one where acquisitions were concerned. In March, the group announced it had made its third US healthcare acquisition, acquiring Amerilab in an $85 million (€78.4 million) deal.Mr Murphy told The Irish Times that the company remains active on the mergers and acquisitions front.

Goodbody analyst Gerry Hennigan wrote in a note to clients that he believes the company’s “historically disciplined approach to dealflow may prove fruitful should opportunities unfold for DCC as expected”.

DCC said net debt (excluding lease creditors) was £60.2 million at the end of the financial year, with cash on the balance sheet of approximately £1.7 billion and undrawn committed facilities of approximately £350 million.

The group is proposing a final dividend of 95.79 pence per share, a 2.6 per cent increase on the prior year, bringing the total dividend for the year to 145.27 pence per share, a 5 per cent rise.