# DCC Q3 group operating profit strongly ahead of the prior year

- Link: https://www.directorstalkinterviews.com/dcc-q3-group-operating-profit-strongly-ahead-of-the-prior-year/412957750
- Published: 2021-02-02T07:21:32+00:00
- Author: Amilia Stone

**[DCC plc](https://www.directorstalkinterviews.com/ftse-company/dcc-plc/dcc.l)**(
LON:DCC), the leading international sales, marketing and support services group,
has issued 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 £230
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, 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 (£106 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, 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.

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