Irish fuel distribution group DCC (DCC) announces strong results for the year ended 31 March 2019 and an update on its latest acquisition spree.

The news seems to have gone down well with investors since the shares are up 3.3% at £67.00. Reading through the organic figures and you might wonder why.


DCC is major distributor of components and raw materials for industry, plus electronic consumer products, among other things. Mainly it gets oil, gas and petrol from A to B.

Underlying volumes in its two biggest divisions - LPG distribution (liquefied petroleum gas) and Retail & Oil (R&O), declined 2.8% and 3.8% respectively.

Yet overall revenues the year increased 16% to £15.2bn driving a 20% hike in operating profit, to £460m. LPG and R&O generated 73% of those operating profits, the rest came from DCC's smaller Technology and Healthcare distribution units.


The key to understanding the company is to grasp its roll-up strategy, absorbing smaller distribution businesses in niche markets and new geographies into the DCC family, then extracting operating synergy savings.

Last year the company spent £370m on acquisitions, with £311m of that on technology expansion. Businesses were acquired in the US, Germany, the Netherlands and the UK.

It is a strategy that DCC does well. Return on capital was an impressive 17% last year, albeit marginally 0.5% down on the previous year.

The company also has an unbroken track record of dividend increases stretching back 25 years, including 2019's 12.5% hike.

Continuing this performance relies on the company's continued ability to seed growth with well-priced and attractive acquisitions and successfully integrate them.

Clearly investor's confidence that it can pull off this trick again and into the future remains relatively undimmed.

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Issue Date: 14 May 2019