The sales, marketing and support services conglomerate DCC, revealed a 4.1% boost in its revised operating profit which totalled £682.8 million (€794.3 million) for the past financial year, according to the financial statements released on Tuesday. This increase was primarily due to a robust organic growth in its energy sector, which counterbalanced the challenging trading conditions faced by its healthcare and technology divisions.
Unfortunately, the group’s after-tax profit for the financial year ending 31st March 2024, dipped to £340.6 million in comparison to £346.8 million in the previous year. DCC, which is based in Dublin and is featured on the FTSE 100 in London, operates businesses across 22 countries spanning four continents and boasts a workforce of over 16,600 employees.
The firm’s adjusted earnings per share dropped minutely by 0.3% to 455.01 pence. However, the board has suggested a 5% hike in the final dividend to 133.53 pence per share. Coupled with the interim dividend of 63.04 pence per share, this would amount to an annual dividend of 196.57 pence per share.
Acknowledging a 10.6% reduction in the group’s revenue to £19.9 billion, it was acknowledged that this was influenced by the low wholesale cost of energy within its energy division. This resulted in a revenue of £14.2 billion in that department, reflecting an 11.8% decrement. Despite like-for-like volumes only being 2.6% lower than the preceding year, the significant revenue shrinkage was attributed to the reduction in the cost of wholesale energy commodities throughout the year.
In contrast, the group’s healthcare section recorded revenue earnings of £859.4 million, marking a 4.6% growth. This improvement was propelled by the purchase of Medi-Globe in September. However, a fall in the consumer technology market resulted in a 9.3% drop in revenue, to £4.8 billion, in the group’s technology division.
DCC’s CEO, Donal Murphy, stated the “exceptional growth” exhibited by the energy division was the “standout achievement” in the financial year. He also expressed optimism regarding the return to organic growth by the healthcare division in the second half of the year.
The growth of operating profit, which amounted to 4.5 per cent, was largely a result of acquisitions made in the current and preceding years. Medi-Globe and Centreco were key acquisitions from last year and this year respectively, significantly boosting the profit growth.
While organic operating profit growth was fairly minor at 0.8 per cent, it was the energy division’s exceptional organic performance that fuelled this progress. Conversely, the healthcare and technology divisions saw a downturn due to challenging market conditions.
The inflationary backdrop persisted as a “major characteristic of the year” across all areas, despite the group’s overhead cost base witnessing a hike of 7.5 per cent or £131.2 million, the overall organic profit growth was still achieved.
Net financial expenses saw a significant surge from £81.4 million in the previous year to £104.8 million, primarily due to an elevated interest rate climate driving up the overall net financing costs.
As per DCC, the drastic shift in global interest rates from summer 2022 onwards has continued to influence the cost associated with the floating rate aspect of the group’s gross debt. However, the negative impact of this was partially neutralised by the enhanced return on the group’s gross cash.
The average net debt, exclusive of lease creditors, amounted to £1.2 billion, up from £1 billion in the previous year. The company noted that this surge was largely due to substantial acquisition activities undertaken during the year.
An incremental exceptional net charge, subject to tax and non-controlling interests, of £33.3 million, up from £28.7 million in the previous year, was incurred by the group.