TIDMDCC
RNS Number : 6300N
DCC PLC
02 February 2021
2 February 2021
DCC plc
Interim Management Statement
Strong Growth in Third Quarter Group Operating Profit
DCC plc, the leading international sales, marketing and support
services group, is issuing this Interim Management Statement for
the third quarter ended 31 December 2020.
Third quarter ended 31 December 2020
Group operating profit for the third quarter ended 31 December
2020 was strongly ahead of the prior year. Notwithstanding the
disruption and uncertainty caused by the global pandemic, the Group
recorded strong organic operating profit growth, whilst also
benefiting from acquisitions completed in the prior year.
DCC LPG recorded good operating profit growth in the third
quarter of the financial year. The business continued to experience
reduced volume demand from commercial and industrial customers,
reflecting the continuing impact of varying levels of restrictions
in each market in which DCC LPG operates. However, cylinder and
domestic demand remained robust and the favourable mix impact of
this demand drove modest organic profit growth. The business also
benefited from the first-time contribution from the acquisitions of
NES Group in the US, completed in September 2020, and Budget Energy
in Ireland, acquired in April 2020.
DCC Retail & Oil delivered good organic operating profit
growth. Although volumes in the quarter continued to be impacted by
lower commercial, industrial and transport demand due to Covid-19
restrictions, the impact was less severe than that experienced
earlier in the financial year. The businesses in Britain and
Scandinavia delivered strong performances in the quarter,
benefiting from good procurement and cost control, as well as
growth in non-fuel income, lubricants and roadside services.
DCC Technology recorded strong organic operating profit growth
in the third quarter of the financial year. Trading conditions in
the B2B sectors, such as the Pro AV category, remained challenging
due to continued restrictions. However, working-from-home, consumer
and audio products saw very strong demand across both the UK &
Ireland and DCC Technology's international operations, in
particular through the etail and non-traditional retail
channels.
DCC Healthcare delivered an excellent performance, with
operating profit well ahead of the prior year. DCC Health &
Beauty Solutions continued to see very strong demand for
nutritional products across all geographic markets, which drove
strong organic growth. The business also benefited from the
first-time contributions of the prior year acquisitions of Ion Labs
and Amerilab Technologies in the US, which have continued to
perform well. DCC Vital also generated very good organic profit
growth. While elective medical procedures and consultations
continue to be impacted by the pandemic, the business has continued
to successfully respond to the changing product and service needs
of the healthcare systems of Britain and Ireland.
Year ending 31 March 2021
The outlook for all economies in which the Group operates
remains very uncertain, with restrictions generally now increasing
again. However, DCC's diverse and resilient business model and the
essential nature of the Group's products and services has seen it
respond well to the challenges of the pandemic and trade robustly.
Assuming normal weather conditions for the balance of the financial
year, DCC expects that the year ending 31 March 2021 will be
another year of development and good growth in operating profit,
ahead of current market consensus expectations.
Development activity
Throughout the year DCC has remained very active from a
development perspective, notwithstanding the difficulties caused by
the pandemic. Since our results announcement for the year ended 31
March 2020 in May 2020, DCC has committed approximately GBP230
million to new acquisitions across Europe and North America. The
Group remains very active from a development perspective and
continues to have the platforms, opportunities and capability to
build the Group into a global leader in its chosen sectors. Recent
acquisition activity of the Group includes:
DCC LPG
United Propane Gas
DCC recently completed the acquisition of United Propane Gas
("UPG"), materially expanding its presence in the US LPG market.
UPG is DCC LPG's largest acquisition since initially entering the
US market in April 2018 and follows the material bolt-on
acquisitions of NES Group in September 2020 and Pacific Coast
Energy in April 2019. The acquisition has considerably expanded DCC
LPG's geographic presence from 14 to 21 states and almost doubled
its customer base to over 230,000 customers. DCC now is the sixth
largest business in the highly fragmented US LPG market(1) . The
integration of the acquisition is at an early stage and proceeding
to plan and the business is trading in line with expectations.
Together with a smaller bolt-on acquisition completed in
Colorado in December 2020, the combined enterprise value of the
transactions was $145 million (GBP106 million). Further details on
the acquisition can be found in DCC's stock exchange announcement
of 5 January 2021.
DCC Retail & Oil
In December 2020, DCC Retail & Oil agreed to acquire Campus
Oil Ireland ("Campus"), subject to competition authority approval.
Campus distributes liquid fuels across domestic, agricultural,
industrial, retail and wholesale customers in the Irish market. The
acquisition of Campus is complementary to DCC's existing liquid
fuels distribution business in Ireland. DCC Retail & Oil also
recently completed the acquisition of a small bolt-on acquisition
in the lubricants sector in the UK, building further scale in this
growing business area and recently agreed to acquire a small
portfolio of convenience service stations in the north of
England.
DCC Technology
DCC Technology recently agreed to acquire JB&A, a leading
North American distributor of broadcast, post-production and Pro AV
technologies, to system integrators and B2B resellers. Located in
San Rafael, California, the business recorded revenues of $80
million in its most recent financial year and employs approximately
30 people.
The acquisition of JB&A continues DCC Technology's strategy
of building a leading pro AV, pro audio and music value-added
distribution business in North America, following the acquisitions
of Stampede (2018), Jam (2018) and The Music People (2020).
Final results
DCC expects to announce its results for the year ending 31 March
2021 on 18 May 2021.
(1) Based on volumes
For reference:
Donal Murphy, Chief Executive
Kevin Lucey, Chief Financial Officer
Rossa White, Head of Group Investor Relations
Telephone: +353 1 2799400
Email: investorrelations@dcc.ie
Web: www.dcc.ie
Powerscourt (Media)
Lisa Kavanagh / Victoria Palmer-Moore
Telephone: +44 20 7250 1446
Email: DCC@powerscourt-group.com
About DCC plc
DCC is a leading international sales, marketing and support
services group with a clear focus on performance and growth. It
operates through four divisions: LPG, Retail & Oil, Healthcare
and Technology.
DCC is an ambitious and entrepreneurial business operating in 20
countries, supplying products and services used by millions of
people every day. Building strong routes to market, driving for
results, focusing on cash conversion and generating superior
sustainable returns on capital employed enable the Group to
reinvest in its business, creating value for its stakeholders.
Headquartered in Dublin, employing approximately 13,500 people,
DCC's four divisions are:
-- DCC LPG - a leading LPG sales and marketing business with operations in Europe, the US and Asia and a developing
business in the retailing of natural gas and electricity;
-- DCC Retail & Oil - a leader in the sales, marketing and retailing of transport fuels and commercial fuels,
heating oils and related products and services in Europe;
-- DCC Technology - a leading route-to-market and supply chain partner for global technology brands and customers;
and
-- DCC Healthcare - a leading healthcare business, providing products and services to healthcare providers and
health and beauty brand owners.
DCC plc is listed on the London Stock Exchange and is a
constituent of the FTSE 100. In its financial year ended 31 March
2020, DCC generated revenue of GBP14.8 billion and operating profit
of GBP494.3 million.
DCC has an excellent record, delivering compound annual growth
of 14.5% in operating profit and generating an average return on
capital employed of approximately 19% over 26 years as a public
company.
Forward-looking statements
This announcement contains some forward-looking statements that
represent DCC's expectations for its business, based on current
expectations about future events, which by their nature involve
risk and uncertainty. DCC believes that its expectations and
assumptions with respect to these forward-looking statements are
reasonable, however because they involve risk and uncertainty as to
future circumstances, which are in many cases beyond DCC's control,
actual results or performance may differ materially from those
expressed in or implied by such forward-looking statements.
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