Support services giant DCC reveals the best way to grow is by steering away from contract-related work

 
Oliver Gill
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LPG firm Flogas is one of DCC's portfolio companies

FTSE 100 support services firm DCC today sought to differentiate itself from beleaguered sector rivals after posting better-than-expected half-year profits.

The Ireland-based firm, which has a broad range of portfolio companies which includes firms operating Esso petrol stations and manufacturing Body Shop body butter, posted a 14.4 per cent growth in operating profits.

The support services sector has come under pressure of late, with the likes of Mitie, Interserve and Carillion hit by painful write-downs.

But boss Donal Murphy told City A.M. DCC operated in a much different way.

He said:

Our business is very different. If you look across our business, we are buying and selling oil and LPG to millions of customers. We have no one customer dependency. We are not getting into the contract-related business, similar to others.

Our technology business is broadly based, our healthcare business is broadly based. We have just a very defensible business model, which has performed very well over many years.

Read more: DCC's shares spike after new energy acquisition announced

Profits

DCC revealed a record spend on acquisitions in the current financial year, totalling £550m. Murphy said the group was able to splash the cash after generating “good organic profits”.

Group revenue rose 16.4 per cent to £1.6bn, generating operating profit of £122.5m. Earnings per share jumped 16.1 per cent to 95.5p.

The positive half-year performance enabled DCC to reward investors with a 10 per cent hike in its dividend.

Shares rose in initial trading before falling back and are currently around one per cent lower.

Included in its acquisitions was the contract to operate Esso garages in Norway, the country’s third largest operator. DCC owns 1,000 petrol stations across Europe and supplies 2,000. It also manufactures around 5bn vitamin tablets, has a large LPG division and delivers medical supplies.

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