DCC PLC (LON:DCC), the leading international sales, marketing and support services group, today announced its results for the year ended 31 March 2020.
|Adjusted operating profit1,2||£494.3m||£460.5m||+7.3%|
|DCC Retail & Oil||£140.3m||£133.7m||+4.9%|
|Adjusted earnings per share1,2||362.6p||358.2p||+1.3%|
|Dividend per share||145.27p||138.35p||+5.0%|
|Free cash flow4||£492.3m||£434.0m|
|Return on capital employed5||16.5%||17.0%|
· Strong performance for the year with all divisions delivering growth, notwithstanding the challenging market conditions experienced during the year including Brexit uncertainty and the emergence of the Covid-19 pandemic. Group adjusted operating profit increased by 7.3% to £494.3 million, ahead of market expectations
· Adjusted earnings per share up 1.3% to 362.6 pence, reflecting strong underlying earnings growth, diluted by the impacts of the prior year equity placing and the adoption of IFRS16
· Continued very strong free cash flow performance, with an excellent 100% conversion of operating profit into free cash flow, and return on capital employed of 16.5%
· Another active period of development for DCC with approximately £170 million of capital committed to new acquisitions, including DCC Healthcare expanding its presence in the US nutritional market with the acquisitions of Ion Labs and Amerilab and continued bolt-on acquisition activity across all divisions
· The Covid-19 pandemic and the global measures being taken to mitigate its impact have resulted in unprecedented change for DCC’s employees, customers and business operations. All DCC operations, deemed essential operations by local governments, have successfully invoked their business continuity plans and are operating effectively, albeit in a much-changed environment. The commitment of DCC’s employees during such a difficult and uncertain period has been extremely evident and has ensured that our customers continue to receive our essential products and services. Protecting the health, safety and well-being of employees, ensuring the continued supply of these essential products and services to customers, whilst maintaining DCC’s very strong financial position, are the Group’s key priorities at this time
· With restrictions introduced in all countries where the Group operates, each division of DCC has experienced changed demand patterns. This resulted in significant demand increases in some areas, with significant declines in others. The strong trading performance of the Group in March 2020 benefited from increased demand for essential heating and healthcare products, with negative impacts most apparent later in the month in reduced demand for retail transport fuels and certain consumer technology products
· An integral part of the Group’s strategy is the maintenance of a strong and liquid balance sheet. At 31 March 2020, DCC had net debt (excluding lease creditors) of £60.2 million, approximately 0.1 times Net Debt to EBITDA (versus a net debt covenant of 3.5 times) and had cash on the balance sheet of approximately £1.7 billion and undrawn committed facilities of approximately £350 million. DCC’s extremely strong financial position leaves the Group very well placed to navigate this period of unprecedented uncertainty and to continue its growth and development in the coming years
· A proposed final dividend of 95.79 pence per share, a 2.6% increase on the prior year, will see the total dividend for the year increase by 5.0% to 145.27 pence per share
· With the Group entering its seasonally quieter period and with extensive lockdowns in place for the full month of April 2020, the Group has continued to trade robustly and is significantly profitable, although behind the prior year and with continuing changed demand profiles. Given the sustained uncertainty, the Group has been actively managing its cost base and resources. All discretionary or non-essential operating or capital expenditure has been curtailed. Essential maintenance and health and safety expenditure continues. Further detail on the impact of Covid-19 and DCC’s current trading is included on pages 4 and 5
· The Group continues to be active from a development perspective, as evidenced by the continued bolt-on activity completed since 31 March 2020, although travel restrictions will likely curtail development activity somewhat in the short-term
· Through a period of extraordinary challenge and uncertainty, the Group continues to operate effectively and trade robustly. Whilst the easing of restrictions is underway and the eventual cessation of restrictions will occur at some point, it is likely that the global economy will continue to face significant challenges. In the short-term, DCC’s priorities will remain the health, safety and well-being of its people, servicing its customers and maintaining the strength and liquidity of its financial position, whilst also seeking areas of organic and acquisitive opportunity to add to its market leading positions across its four divisions
· DCC has a diverse and resilient business model, leading market positions and an extremely strong balance sheet and is well positioned to continue its growth and development into the future
1 The current financial year includes the impact of the adoption of IFRS 16 Leases; the comparatives have not been restated in accordance with transitional guidelines. See Note 2 Accounting Policies (page 29) for further details.
2 Excluding net exceptionals and amortisation of intangible assets.
3 The reported growth in operating profit in DCC Healthcare is impacted by the disposal of its UK generic pharmaceutical activities and related manufacturing facility in Ireland (Kent Pharma and Athlone Laboratories) in September 2019. Operating profit growth on a continuing basis is 8.6%.
4 After net working capital and net capital expenditure and before net exceptionals, interest and tax payments.
5 Excluding the impact of the adoption of IFRS 16 Leases. Current year ROCE including the impact of the adoption of IFRS 16 Leases is 15.1%
Commenting on the results, Donal Murphy, Chief Executive, said:
“I am very pleased to report that the year ended 31 March 2020 has been another year of strong growth for DCC. A good trading performance, excellent cash generation, strong returns on capital employed and continued acquisition activity are all hallmarks of DCC’s resilient business model.
The Group continues to be encouraged by the opportunities available to each division to expand its leading market positions in both existing and new markets. During the year DCC Healthcare’s acquisitions of Ion Labs and Amerilab Technologies in the US were material steps in the division’s strategy to build a business of scale in the world’s largest health supplements and nutritional products market. The US market is highly innovative, fragmented and growing strongly and, we believe, presents an exciting opportunity for the Group to develop, both organically and through acquisition, a leading market position in this attractive market.
Covid-19 presents significant challenges to society and the economies in which we operate. The uncertainty it has created is like nothing we have seen in our lifetimes and our number one priority during this time is to keep our employees safe and well. All DCC businesses have and continue to operate effectively during this extraordinary period, ensuring our customers receive the range of essential products and services DCC provides. I am especially proud of all our people who are working tirelessly through these exceptional times. Even during this period of huge challenge, our people are fulfilling DCC’s purpose of enabling people and businesses to grow and progress.
DCC’s diverse, resilient business model and financial strength ensures the Group is in a very strong position to navigate through this period of uncertainty. The Group continues to have the platforms, opportunities and capability for further development across each of our four divisions.”
Results presentation – audio webcast and conference call details
DCC will not be hosting a physical results presentation, in line with current guidance on social distancing. Instead there will be a webcast and audio call of the presentation at 9.00am today. The access details for the live presentation are as follows:
Ireland: +353 15060650
UK / International: +44 (0) 2071 928 338
The results statement, presentation slides and replay of the audio webcast will be made available at www.dcc.ie.