Results Presentation
For the year ended 31 March 2020
19 May 2020
Disclaimer
This presentation does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any shares or other securities of DCC plc ("DCC").
This presentation contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risk and uncertainty. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable; however because they involve risk and uncertainty as to future circumstance, which are in many cases beyond DCC's control, actual results or performance may differ materially from those expressed or implied by such forward-looking statements. DCC undertakes no duty to and will not necessarily update any such statements in light of new information or future events, except to the extent required by any applicable law or regulation. Recipients of this presentation are therefore cautioned that a number of important factors could cause actual results or outcomes to differ materially from those expressed in or implied by any forward-looking statements.
Any statement in this presentation which infers that transactions may be earnings accretive does not constitute a profit forecast and should not be interpreted to mean that DCC's earnings or net assets in the first full financial year following the transactions, nor in any subsequent period, would necessarily match or be greater than those for the relevant preceding financial year.
Your attention is drawn to the risk factors referred to in the Principal Risks and Uncertainties section of DCC's Annual Report. These risks and uncertainties do not necessarily comprise all the risk factors associated with DCC and/or any recently acquired businesses. There may be other risks which may have an adverse effect on the business, financial condition, results or future prospects of DCC. In particular, it should be borne in mind that past performance is no guide to future performance. Persons needing advice should contact an independent financial advisor.
1 | DCC Results Presentation - 19 May 2020 |
Agenda
- Introduction and highlights
- Business and financial review
- Current trading and Covid-19
- Summary and Q&A
2 | DCC Results Presentation - 19 May 2020 |
Introduction and highlights
- Strong performance for the year
- Operating profit growth across each division
- Excellent cash flow performance
- Strong return on capital employed
- Balance sheet in excellent shape, particularly strong and liquid
- Another good period of development activity
- c.£170 million of capital committed to new acquisitions
- Substantial expansion of US nutritional business in DCC Healthcare with acquisitions of Ion Labs and Amerilab
- Continued bolt-on activity across each division, including recent of bolt-on in gas & power in Ireland
- Group responding well to challenges of Covid-19
- Health and safety our key priority - operations, products and services deemed
'essential' - DCC businesses and people quickly adapted to new ways of working
- Group trading robustly since beginning of new financial year
- Health and safety our key priority - operations, products and services deemed
3 | DCC Results Presentation - 19 May 2020 |
Business and financial review
Fergal O'Dwyer
Chief Financial Officer
Financial summary
For the year ended 31 March 2020
£'m | 2020 | 2019 | % change |
Revenue | 14,755 | 15,277 | -3.1% |
Group adjusted operating profit1,2 | 494.3 | 460.5 | +7.3% |
Finance costs net and other1 | (54.3) | (45.9) | |
Profit before net exceptionals, | 440.0 | 414.6 | +6.1% |
amortisation of intangible assets and tax | |||
Adjusted EPS1,2 | 362.6 pence | 358.2 pence | +1.3% |
Dividend per share | 145.27 pence | 138.35 pence | +5.0% |
Free cash flow | £492.3m | £434.0m | |
Net debt - excluding lease creditors | 60.2 | 18.3 | |
Lease creditors | 306.9 | 0.1 | |
Net debt - including lease creditors | 367.1 | 18.4 | |
ROCE | 16.5% | 17.0% |
- The current financial year includes the impact of the adoption of IFRS 16 Leases; the comparatives have not been restated in accordance with transitional guidelines. As anticipated, the Group adjusted operating profit reflects a benefit of £5.0 million, while finance costs reflect an incremental charge of £8.6 million from the adoption of IFRS 16, resulting in a net negative impact on earnings of approximately £3.6 million, or 3.7 pence per share
- Excluding net exceptionals and amortisation of intangible assets
5 | DCC Results Presentation - 19 May 2020 |
Divisional results
For the year ended 31 March 2020
£'m | 2020 | 2019 | % change |
Adjusted operating profit1,2 | |||
DCC LPG | 228.2 | 201.8 | +13.1% |
DCC Retail & Oil | 140.3 | 133.7 | +4.9% |
DCC Technology | 65.3 | 64.7 | +1.0% |
DCC Healthcare3 | 60.5 | 60.3 | +0.3% |
Group adjusted operating profit | 494.3 | 460.5 | +7.3% |
By Division
12% | LPG |
13% | Retail & Oil |
46% | |
Technology | |
29% | Healthcare |
By Geography | |
14% | UK |
36% | |
Ireland |
44%
6%
Continental Europe
RoW
- The current financial year includes the impact of the adoption of IFRS 16 Leases; the comparatives have not been restated in accordance with transitional guidelines
- Excluding net exceptionals and amortisation of intangible assets
- The reported growth in operating profit in DCC Healthcare is impacted by the disposal of its UK generic pharmaceutical activities and related manufacturing facility in Ireland (Kent Pharma and Athlone Laboratories) in September 2019. Operating profit growth on a continuing basis is 8.6%
6 | DCC Results Presentation - 19 May 2020 |
Divisional highlights
For the year ended 31 March 2020
DCC LPG
DCC Retail & Oil
DCC Technology
DCC Healthcare
- Very strong profit growth +13.1% - c. 75% organic
- Good organic volume growth, continuing oil to LPG conversions, customer wins in B2B natural gas and strong procurement and cost control
- Very strong performances in Britain, Ireland and the US
- Good profit growth +4.9% (+6.0% ccy) - c. 50% ccy growth organic
- Increased penetration of value-added products and services and strong cost control
- Good performances in Britain, Ireland, Denmark and France
- Continued expansion of retail and HGV networks
- Modest profit growth +1.0% - contribution from acquisitions in current and prior year
- Very difficult market in the UK due to Brexit uncertainty and impact of Covid-19 - organic revenue and profit decline
- Good growth in North America and Continental Europe
- Strong profit growth on continuing activities +8.6% - c.30% organic
- Strong organic growth in DCC Vital and contribution of small bolt-on acquisitions. DCC H&BS had good growth in nutrition, investments in beauty to on-board new business
- US acquisitions of Ion Labs in November 2019 and Amerilab in March 2020 performing well
7 | DCC Results Presentation - 19 May 2020 |
Strong cash flow generation continues
2020 | 26 Years | ||
Cash Flow | £m | £m | |
Operating profit | 494.3 | 4,198.6 | |
Decrease in working capital | 49.2 | 408.7 | |
Depreciation and other | 122.3 | 1,070.5 | |
Operating cash flow | 665.8 | 5,677.8 | |
Net capex | (167.8) | (1,438.6) | |
Lease payments net ROU depreciation | (5.7) | (5.7) | |
Free cash flow | 492.3 | 4,233.5 | |
Interest and tax | (116.2) | (918.0) | |
Free cash flow after interest and tax | 376.1 | 3,315.5 | |
Acquisitions | (227.5) | (3,253.5) | |
Disposals / exceptional items | 5.8 | 319.8 | |
Dividends | (139.2) | (1,120.7) | |
Share issues / buybacks | 0.3 | 767.6 | |
Net cash inflow | 15.5 | 28.7 | |
Opening net debt | (18.4) | (1.6) | |
Translation and other | (70.1) | (100.1) | |
IFRS 16 opening transition adjustment | (294.1) | (294.1) | |
Closing net debt | (367.1) | (367.1) | |
Closing net debt excl. lease creditors | (60.2) | (60.2) | |
Total cash | 1,685 | 1,685 |
Excellent
FCF conversion
Free cash
conversion of 100%
in 2020, 26 year average of 101%
Strong & liquid balance sheet
Closing net debt
(excl. lease
creditors) of £60.2m
Net Debt/EBITDA
of 0.1x
8 | DCC Results Presentation - 19 May 2020 |
Current trading and Covid-19
Donal Murphy
Chief Executive
Covid-19 - Impact and actions
Swift and decisive action taken to ensure the safety of our people and that customers continue to receive DCC's essential products and services
Impact | Actions |
• Lockdown and related restrictions | • All businesses operational, with |
triggering business continuity plans | appropriate changes to operations - |
• Changed demand patterns experienced | safety of our people our first priority |
• Active management of cost base and | |
in each division and geography | |
• Increased demand for essential heating | resources |
• All discretionary and non-essential | |
and healthcare products | |
• Demand negatively impacted for retail | expenditure curtailed. Essential |
maintenance and health and safety | |
transport fuels and certain consumer and | |
expenditure continues | |
B2B technology products | |
• Group continues to be active from a | |
development perspective |
10 DCC Results Presentation - 19 May 2020
Current trading
DCC operating effectively and trading robustly, albeit behind the prior year, in seasonally less significant period
DCC LPG
DCC Retail & Oil
DCC Technology
DCC Healthcare
- Good domestic/cylinder demand across France, Britain and US despite warmer weather conditions
- Strong cost control somewhat mitigating impact of lower industrial/commercial demand with operating profit behind prior year, reflecting lower commercial volumes
- Strong demand from domestic and agri customers
- Transport fuel demand declined significantly during second half of March and into April - volumes increasing in May as restrictions ease
- Operating profit modestly behind prior year due to strong domestic and agri demand
- Strong consumer and etail demand, particularly in working-from-home products
- Pro AV and some other B2B categories impacted as installations difficult through lockdown
- Relative performance to prior year improved in second half of April and into May, although operating profit behind prior year
- Strong performance in first six weeks of new year, well ahead of prior year
- Good demand for nutritional products and recent acquisitions, Ion Labs and Amerilab, performing well
- Strong demand in DCC Vital for Covid-19-related products more than offsetting reduced demand for elective surgery and primary care products
11 DCC Results Presentation - 19 May 2020
Covid-19 - Playing our part
DCC LPG | DCC Retail & Oil | DCC Technology | DCC Healthcare |
12 DCC Results Presentation - 19 May 2020
Summary and Q&A
Donal Murphy
Chief Executive
Summary
- Strong growth in FY20 operating profit, excellent cash flow generation and continued development activity
- DCC people and operations have responded very well to Covid-19 challenges and Group is trading robustly
- Continue to have the platforms, opportunities and capability for further development across each of our divisions
DCC has a diverse and resilient business model, leading market positions and an extremely strong balance sheet and is well positioned to continue its growth and development into the future
14 DCC Results Presentation - 19 May 2020
Strategy continues to deliver
26 year CAGR | |||||||||||||||||||||||||||||||||||||||
Operating profit (£m) | 1 | 26 year CAGR1 | EPS (pence) | ||||||||||||||||||||||||||||||||||||
12.1% | |||||||||||||||||||||||||||||||||||||||
14.5% | |||||||||||||||||||||||||||||||||||||||
358 363 | |||||||||||||||||||||||||||||||||||||||
494 | 317 | ||||||||||||||||||||||||||||||||||||||
461 | |||||||||||||||||||||||||||||||||||||||
287 | |||||||||||||||||||||||||||||||||||||||
383 | 243 | ||||||||||||||||||||||||||||||||||||||
345 | |||||||||||||||||||||||||||||||||||||||
285 | 202 | ||||||||||||||||||||||||||||||||||||||
183 | |||||||||||||||||||||||||||||||||||||||
208 | 151 164 | 165 | |||||||||||||||||||||||||||||||||||||
170 189 | 129 | 133 | |||||||||||||||||||||||||||||||||||||
176 | |||||||||||||||||||||||||||||||||||||||
155 | 104 | ||||||||||||||||||||||||||||||||||||||
139 | |||||||||||||||||||||||||||||||||||||||
131 | 73 | 86 | |||||||||||||||||||||||||||||||||||||
46 | 49 | 54 | 61 | 62 | 68 | 78 | 97 | 34 | 37 | 46 | 52 | 59 | 67 | 69 | |||||||||||||||||||||||||
15 | 16 | 19 | 20 | 26 | 32 | 37 | 17 | 27 | 28 | ||||||||||||||||||||||||||||||
19 | 22 | ||||||||||||||||||||||||||||||||||||||
1994 | 2020 | 1994 | 2020 |
Dividend (pence) | ||||||||||||||||||
26 year CAGR | ||||||||||||||||||
14.0% | ||||||||||||||||||
145 | ||||||||||||||||||
138 | ||||||||||||||||||
123 | ||||||||||||||||||
112 | ||||||||||||||||||
97 | ||||||||||||||||||
85 | ||||||||||||||||||
77 | ||||||||||||||||||
63 | 68 | 70 | ||||||||||||||||
60 | ||||||||||||||||||
52 | ||||||||||||||||||
40 | ||||||||||||||||||
9 | 10 | 11 | 13 | 15 | 18 | 23 | 25 | 29 | 34 | |||||||||
5 | 6 | 7 | 8 | |||||||||||||||
1994 | 2020 |
1 On a continuing basis
15 | DCC Results Presentation - 19 May 2020 |
Free cash flow conversion (%) 26 year conversion
101.0%
160.0%
140.0%
120.0%
100.0%
80.0%
60.0%
40.0%
20.0%
0.0% | 2020 |
1994 | |
Appendix
DCC LPG
2020 | 2019 | % change | Volumes | |||
15% | Britain | |||||
Volume ('000 tonnes) | 2,176.3 | 2,078.3 | +4.7% | 11% | ||
Operating profit (£'m) | 228.2 | 201.8 | +13.1% | 10% | Ireland | |
Continental Europe | ||||||
Operating profit / tonne | £104.87 | £97.11 | ||||
RoW | ||||||
ROCE | 18.4% | 17.1% | ||||
64% | ||||||
- Very strong performance with operating profits up 13.1%
- Organic operating profit growth was driven by good volume growth and strong procurement and cost control
- Volume growth of 4.7%, driven by continued success in oil to gas conversions in Britain and market share gains
- France delivered good operating profit growth with new business development driving growth in B2B natural gas & power, with good procurement and cost control contributing to strong performance in LPG
- In Britain & Ireland, the businesses continued to grow sales to industrial and commercial customers and also delivered operational improvements, including in supply chain and procurement
- The US business performed strongly, with good organic profit growth and also benefited from the successful integration of Pacific Coast Energy, acquired in April 2019
17 | DCC Results Presentation - 19 May 2020 |
DCC Retail & Oil
2020 | 2019 | % change | Volumes |
Volume (bn litres) | 11.632 | 12.151 | -4.3% | |||
Britain | ||||||
Operating profit (£'m) | 140.3 | 133.7 | +4.9% | 46% | ||
49% | Ireland | |||||
Operating profit / litre | 1.21ppl | 1.10ppl | ||||
Continental | ||||||
ROCE | 18.5% | 18.6% | 5% | Europe | ||
- Strong growth with operating profits up 4.9%
- Volumes behind prior year due to decision to exit some lower margin marine, aviation and commercial relationships in Britain
- In Britain and Ireland, very strong organic profit growth driven by increased penetration of premium fuels and good cost performance
- Good performance in Scandinavia driven by strong organic profit growth in Denmark where business continued to increase product offering and further improved performance in its retail and commercial segments. The businesses in Norway and Sweden performed in line with expectations
- Strong organic profit growth in France reflecting a continued focus on business development and customer engagement
- Development continued with further expansion of the retail network, including a partnership with Tesco to operate their forecourts in Ireland and further expansion of lubricants business
18 | DCC Results Presentation - 19 May 2020 |
DCC Technology
2020 | 2019 | % change Revenue by geography | |||
Revenue (£'m) | 3,913 | 3,631 | +7.8% | 15% | |
Operating profit (£'m) | 65.3 | 64.7 | +1.0% | UK&I | |
17% | Cont. Europe | ||||
Operating margin | 1.7% | 1.8% | |||
68% | RoW | ||||
ROCE | 11.0% | 14.3% | |||
- Operating profit growth of 1.0%
- Difficult year with challenges of Brexit-related uncertainty in the UK and emergence of Covid 19, offsetting benefit of acquisitions completed in current and prior year and good growth in North America and Continental Europe
- UK market difficult across all channels, throughout the year in B2B and enterprise, and increasingly in the consumer channel into Christmas. Business market shares remain robust with growth in key product categories including smarthome, computing, security and wireless. The Irish business performed in line with expectations
- In Continental Europe, operating profit growth was primarily driven by the previously announced acquisitions of Amacom and Comm-Tec. Amacom in particular performing very strongly, leveraging integration capability with key customers and suppliers
- The North American business performed very well across all key categories, benefiting from good market conditions and new vendor additions
19 | DCC Results Presentation - 19 May 2020 |
DCC Healthcare
2020 | 2019 | % change Revenue by business | ||||
Revenue (£'m)* | 549.5 | 519.0 | +5.9% | |||
Healthcare | ||||||
Operating profit (£'m)* | 56.0 | 51.6 | +8.6% | |||
45% | providers | |||||
Operating margin | 10.2% | 9.9% | ||||
55% | H&B Brand | |||||
Owners | ||||||
ROCE | 14.7% | 16.6% | ||||
*On a continuing basis (adjusted to reflect disposal of Kent Pharma)
- Excellent strategic progress and very strong operating profit:
- DCC Vital:
- Strong organic operating profit growth and benefit of bolt-on acquisitions completed in first half of the year, business responded very well to increased demand related to Covid-19 at end of year
- Strong growth in pharma in Ireland, particularly in sales of blood plasma products and exempt medicinal products, and a robust performance in Britain - market impacted by Brexit for much of year
- DCC Health & Beauty Solutions:
- Significant expansion in the US, through acquisitions of Ion Labs and Amerilab, adding important new customer relationships and enhanced product format capability
-
Good growth in nutritional products, although growth in Europe was held back due to destocking by small number of customers. In Beauty, benefit of enhanced customer mix with increased weighting
of premium products apparent through second half of year
20 DCC Results Presentation - 19 May 2020
Financial summary
Volumes / | Gross margin | Operating | Operating | pt/ppl/% of | |
revenue | costs | profit | sales change | ||
DCC LPG (tonnes) | 2,176kT | £307pt | £440m | £228m | £105pt |
+4.7% | vs £297pt; +3.3% | £202pt; +1.0% | +13.1% | vs £97pt; +8.1% | |
DCC Retail & Oil (litres) | 11.632bn | 4.87ppl | £426m | £140m | 1.21ppl |
-4.3% | vs 4.61pt; +5.6% | 3.66ppl; +4.3% | +4.9% | vs 1.10; +10% | |
DCC Technology & DCC | £4,491m | 11.3% | £380m | £126m | 2.8%1 |
Healthcare | +6.7% | vs 10.9% | 8.5% vs 7.9% | +0.6% | vs 3.0% |
Group | £14,755m | £1,740m | £1,246m | £494m |
-3.1% | +10.6% | +5.9% | +7.3% | |
- Revenue ex-DCC LPG and DCC Retail & Oil up 6.7%, primarily due to acquisitions in DCC Technology
- DCC LPG gross margin increased modestly by £10 (+3.3%) to £307 per tonne, driven by product mix
- DCC Retail & Oil gross margin increased to 4.87ppl, a 0.26ppl (+5.6%) - increase again reflecting mix
- Gross margin excluding DCC LPG and DCC Retail & Oil of 11.3% (2019: 10.9 %) - higher service element and product mix
- Operating costs +£69m (+5.9%) (acqs +£52m, organic +£27m, currency -£10m); organic +2.2%
1 Ex the disposal of DCC Healthcare's pharma business operating profit growth on a continuing basis is 4.4%.
21 | DCC Results Presentation - 19 May 2020 |
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DCC plc published this content on 19 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 May 2020 08:52:04 UTC