DCC Energy operating profit grows, vindicating acquisition strategy
DCC today announced its results for the year ended 31 March 2010.
Revenue EUR 6,725.0m +5.1%
Operating profit EUR192.8m +6.9%
Profit before net exceptional items, amortisation of intangible assets and tax EUR182.1m +14.2%
Profit before tax EUR164.9m +19.7%
Commenting on the results, Tommy Breen, Chief Executive said:
“DCC had an excellent second half, which resulted in the Group’s operating profit for the full year increasing by 12.8% on a constant currency basis and profit before exceptional items, amortisation of intangible assets and tax increasing by 20.7%, also on a constant currency basis. This result was achieved against a backdrop of difficult economic and trading conditions and having delivered particularly strong operating profit growth of 22.4% on a constant currency basis in the prior year. Return on total capital employed increased to 18.4% in the year.
Adjusted earnings per share, on a constant currency basis, increased by 11.3%. Reported adjusted earnings per share was 5.2% ahead of the prior year, reflecting the adverse impact of the 6.9% weakening of the sterling/euro exchange rate in the year on the translation into euro of the significant proportion (2010: 75%) of DCC’s profits that are denominated in
sterling.
Cash generation was again particularly strong, helped by a reduction in working capital of E71.8 million, resulting in operating cash flow of E297.8 million. During the year, DCC completed a US private debt placement raising the equivalent of E284 million in 5, 7, 10 and 12 year funding. The strength of DCC’s business model and improving debt market conditions at the time of the placement led to the funds being raised on favourable terms.
DCC Energy, DCC’s largest division, had another year of excellent operating profit growth driven by significant development activity in Britain and continental Europe. DCC Energy’s proven ability to identify, execute, integrate and extract synergies from acquisitions was the key to this growth. The business also enjoyed the benefit of a second consecutive cold winter, although temperatures during the key trading months of April and from October through March were overall similar to the prior year.
The outlook for the year to 31 March 2011 is framed against the continuing uncertain economic outlook and has regard to an assumption that the weather pattern will not be as favourable as it was in each of the last two financial years. At this early stage the Group anticipates an operating profit increase of approximately 5% with adjusted earnings per share to be modestly ahead of the prior year, both on a constant currency basis. Based on an exchange rate of Stg£0.86 = E1.0, this equates to an operating profit increase of approximately 10% and an adjusted earnings per share increase of approximately 5%, both on a reported basis.DCC is in a very strong financial position which provides significant capacity as we pursue an increasing number of acquisition opportunities.”