LONDON (ShareCast) - (Sharecast News) - Sales, marketing and support services company DCC reported a "strong" first half performance on Tuesday, with group adjusted operating profit increasing 14.5% - or 13.7% on a constant currency basis - to £162.6m, in line with expectations.
The FTSE 100 firm said all divisions recorded good profit growth in the "seasonally less significant" first half of the year.

Revenue was down 1.4% year-on-year for the six months ended 30 September, however, at £7.31bn.

At the same time on Tuesday, DCC also announced the acquisition by DCC Healthcare of Ion Laboratories - a Florida-based contract manufacturer of nutritional products - for an enterprise value of about $60m.

On a segmental basis, adjusted operating profit was up 19.8% in LPG at £49m, ahead 6% in retail and oil at £59.7m, grew 42.6% in technology at £25.4m, and was 5.8% firmer in healthcare at £28.5m.

Adjusted earnings per share were 3.0% higher at 110.2p, which the board said reflected the strong earnings growth being offset by an increased number of shares in issue following the equity placing in the prior year.

The board upped the interim dividend by 10%, to 49.5p per share.

DCC's balance sheet at period end remained "very strong and liquid", the board said, with net debt excluding lease creditors standing at £245.3m, which it said would facilitate further development activity for the group.

Notwithstanding the continuing uncertain macroeconomic outlook impacting the UK economy, and the technology business in particular, the company said it believed that the year ending 31 March would be "another year of good operating profit growth and further development", and would be broadly in line with current market consensus expectations.

"I am pleased to report that the first half of the year has been another period of good growth and development for DCC," said chief executive Donal Murphy.

"The business has performed strongly, with group operating profit well ahead of the prior year and all divisions delivering good profit growth, despite the more difficult economic and market backdrop, particularly in the UK."

Murphy said the group's "significant development" in recent years had resulted in DCC having the platforms, opportunities and capability to build itself into a global leader in its chosen sectors.

"Notwithstanding the continuing uncertain macroeconomic outlook impacting the UK economy, and the technology business in particular, the group believes that the year ending 31 March 2020 will be another year of good operating profit growth and further development and will be broadly in line with current market consensus expectations."

On the acquisition of Ion, DCC said the transaction followed the purchase of Elite One Source in February 2018, and explained that it would "significantly enhance" the services offering of DCC Health & Beauty Solutions to customers in the United States market.

It said Ion had a "broad product format capability" encompassing tablets, capsules, powders and liquids across a variety of product categories, including herbal and botanical products, probiotics and liquid nutritionals.

Ion was currently commissioning a new nutritional gummies manufacturing line, which would provide DCC Health & Beauty Solutions with capability in that fast growth category.

It added that Ion's customer base largely consisted of specialty brand owners, with its service offering including product development, formulation, manufacturing, packaging and regulatory services.

Ion's "well-invested" facilities in Largo, Florida totalled 350,000 square feet, and provided capacity to meet its organic growth plans.

The facilities comply with FDA cGMP and Health Canada standards, and were certified by a number of third-party regulatory bodies, including NSF and USDA Organic.

DCC said the business was led by an "experienced management team", employed 360 people and had revenues of around $80m.

The consideration was based on an enterprise value of approximately $60m (£46m), most of which was paid in cash on completion.

"DCC Health & Beauty Solutions provides high-quality services to leading health and beauty brand owners, specialist retailers and direct sales organisations," said Donal Murphy.

"The acquisition of Ion significantly enhances our presence in the US market and Ion will work closely with both Elite One Source and DCC Health & Beauty Solutions' European businesses to cross-sell the full breadth of the group's comprehensive offering for health & beauty brands."

Murphy noted that the US is the world's largest health supplements and nutritional products market.

"It is also an innovative, high-growth market, with a fragmented contract manufacturing base.

"We continue to be excited by the significant opportunities for organic and acquisitive growth in this market."

At 0935 GMT, shares in DCC were down 3.88% at 7,088p.

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