The Investment Column: DCC keeps in focus

"CONGLOMERATE" has been a dirty word in the City for the last few years. The sector's rating has plunged and investment bankers, who never like to miss the chance of bringing in new fees, have managed to break up almost everything in sight.

So it is not surprising that Dublin-based DCC went out of its way yesterday to label itself a focused company, even though it just happens to have four separate divisions which little in common with each other. Jim Flavin the group's chief executive, who has been building the company up since 1976, also claimed DCC was not just driven by acquisitions like an old- fashioned conglomerate and has made its mark by achieving strong organic growth.

But perhaps the main thing that separates DCC from other conglomerates is its share price, which has risen sharply over the last 12 months.

Turnover in the year to the end of March rose 15 per cent to IRpounds 703m and profits after excluding exceptional items in the previous year rose 16 per cent to IRpounds 36.7m.

DCC Sercom's computer hardware and software distribution businesses enjoyed a 31 per cent rise in sales although margins suffered slightly as a result of a changing mix of business. DCC Energy enjoyed a rebound in profits and margins from the distribution of liquified petroleum gas. DCC Foods is poised to supply its Kelkin brand of healthfoods into the UK market, while the smallest division, DCC Healthcare strengthened its grip on the small but profitable business supplying scooters and wheelchairs to help the affluent elderly get about.

Profits beat forecasts and analysts' predictions for the current year have edged up to pounds 41m. The shares rose 15p to 600p yesterday, putting them on a forward p/e of 16. After the strong run that looks high enough for the time being.

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