DCC's share price has jumped 10p to 440p after the group reported a 23 per cent increase in interim operating profit in its continuing activities to £14.3 million.
The industrial holding company, which has interests in the computer, food, energy and healthcare sectors, reported a 17.5 per cent rise in turnover on continuing activities to £307.2 million in the first half of the year and said it expected a good outcome for the full year.
Pre-tax profit slipped to £12.75 million from £15.67 million but last year's figure was boosted by a net exceptional gain of £4.6 million, which included the sale of its stake in Heitons.
Adjusted earnings per share, which exclude the effect of goodwill amortisation and exceptional gains, rose 19.9 per cent to 12.15p and the company said it would pay an interim dividend of 3.52p per share, an increase of 15.8 per cent.
Analysts described the results as solid and in line with expectations and particularly welcomed the turnaround in the energy division and a strong performance from computer services. They have modestly upgraded their full-year forecasts, which now range from 34.0 to 34.6p for earnings per share and from £35.7 million to £36.9 million for pre-tax profits. DCC said it remained responsive to acquisition opportunities after spending £9.66 million in the first-half, but was cautious about prices and was placing particular emphasis on organic growth - growing its existing businesses - in the current bull market.
"Our view is that acquisitions are at a pricey level," chief executive Mr Jim Flavin said. "We like to focus on organic growth predominantly in good times and go into leaner times in good shape to stock up for the future."
All four of DCC's main divisions reported higher turnover and profits.
DCC Sercom, the computer services division which includes computer manual printing subsidiary Printech, reported a 47.6 per cent rise in operating profit to £3.82 million and an increase in margins to 3.5 per cent from 3.2 per cent.
The food division recorded a 7.5 per cent increase in operating profit to £4.34 million with strong growth in healthfoods, snackfoods and ground coffee in particular. Profit margins were steady at 4 per cent, as a favourable mix of sales offset the cost of coffee and tea and sterling strength, although the group said that overall it was a small net beneficiary of sterling's moves.
Excluding Fyffes, which reported a fall in first-half profits, operating profit in the food division was 18 per cent ahead of the previous year.
Although Fyffes has under-performed the market by 50 per cent over the last five years, Mr Flavin said DCC saw it as a "very valuable asset" and was a "long-term corporate partner" in Fyffes.
"We have a strong regard for Fyffes, for what they've done and how they've built their business," Mr Flavin said. "We take a long-term view. They did extraordinarily well in the 1980s and we hope that before the 1990s are out, they will do well again."
The energy division bounced back to profitability in the first half, with profits rising by 67 per cent to £2.28 million and margins recovering to 4.4 per cent from 2.9 per cent. Tight control of operating costs contributed to the improvement while the division is also putting in place broader supply arrangements for both oil and liquefied petroleum gas (LPG).
Operating profit in the healthcare division was up 13.4 per cent to £3.18 million although margins declined to 10.2 per cent from 11.3 per cent, partly due to the increased sterling cost of Fannin's supplies from Britain. DCC's other interests contributed £700,000 in profits, down 18 per cent on the first half of last year.
