Sales, marketing and support services group DCC PLC (LON:DCC) cautioned that the full-year outcome will only be “broadly in line” with market expectations.
Profit before tax in the six months to the end of September fell to £57.56mln from £85.88mln in the same period of last year, largely because exceptional charges rose to £45.7mln from £6.32mln the year before, with the bulk of this year's exceptional charge being a £34.3mln loss on a disposal.
Profit before exceptional items, amortisation of intangible assets and tax rose 13.5% to £135.9mln from £119.8mln in 2018 and was up 12.5% on a constant currency basis.
Adjusted earnings per share nudged up 3.0% to 110.2p while the interim dividend was increased by 10% to 49.5p.
As well as publishing its half-year results, the group also announced the acquisition by its DCC Healthcare division of Ion Laboratories, a Florida-based contract manufacturer of nutritional products for an enterprise value (i.e. adjusted for Ion's debt/cash position) of around US$60mln.
DCC said the acquisition represents a significant step in DCC Healthcare's strategy to build a material presence in the US health supplements and nutritional products market.
“DCC Healthcare's acquisition of Ion Laboratories Inc in the US is a material step in the division's strategy to build a business of scale in the world's largest health supplements and nutritional products market. The US market is highly innovative, fragmented and growing strongly and, we believe, presents an exciting opportunity for the group to develop, both organically and through acquisition, a leading market position in this attractive market,” said Donal Murphy, DCC's chief executive officer (CEO).
Net debt at the end of the reporting period had diminished to £245.3mln from £830.4mln a year earlier.
“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,” said Murphy.
“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."
The phrase “broadly in line with expectations” is generally accepted in the City to mean “slightly below expectations”, as indicated by the share price reaction; the shares were off 5% at 7,008p.