DCC Plc reported a notable increase in operating profit for its fiscal third quarter, driven by organic performance and the inaugural contribution from Austrian acquisition FLAGA. The London-listed conglomerate said it remains on track for the full year, reaffirming guidance for good operating profit growth while continuing strategic development and transaction activity.
Division performance
The Energy segment, reported through DCC Energy’s Solutions unit, delivered solid operating profit growth overall. Energy Products led the improvement, supported by weather-related heating demand that was in line with the prior year. However, weaker conditions in UK Energy Services partially offset some of the gains.
Within Mobility, the business achieved what analysts described as excellent organic profit expansion during the quarter. DCC Technology’s operating profit was broadly unchanged on a continuing basis compared with the prior year. Notably, the North American Technology business returned to growth in the quarter after a difficult first half, a development analysts highlighted as encouraging in advance of a potential sale process.
Deal activity and balance-sheet actions
Management has committed a total of A3100 million to mergers and acquisitions so far this financial year, an increase compared with A359 million recorded in the first half. The company reported a growing pipeline of acquisition opportunities in the energy sector and said the planned disposal of its Healthcare division is progressing according to schedule.
Market consensus and analyst view
Consensus estimates for the fiscal year place operating profit at A3622 million, marginally above an independent broker forecast of A3621 million. Underlying earnings per share consensus stands at 425 pence, versus the brokers 430 pence estimate.
RBC Capital Markets values DCC on a sum-of-the-parts basis, applying a 2027 EBITA multiple of 6.5 times to Technology, consistent with peers, and 10 times to Energy businesses. The latter multiple reflects a 15 percent discount to peers, attributed to the companys conglomerate structure and limited renewables scale. The brokerage maintained an "outperform" rating and a 5,400 pence price target, which implies around 16 percent upside from recent levels.
Share metrics and valuation
DCC shares reacted positively to the quarterly update, rising more than 2 percent on the session. The stock closed at 4,640 pence on Tuesday. Reported valuation metrics include a calendarized 2026 price-to-earnings ratio of 9.5 times, an enterprise value to EBITDA multiple of 5.9 times, a free cash flow yield of 7.1 percent and a dividend yield of 4.8 percent.
Outlook and considerations
Management reiterated its expectation for good operating profit growth for the full year and highlighted continued strategic progress. Analysts flagged key risks tied to execution of the M&A strategy, the seasonal impact of weather on LPG and Retail & Oil divisions and the influence of foreign exchange, given that 45 percent of revenue and 55 percent of profit are generated outside the UK.
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