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Exertis sees 43% increase in operating profit in past 6 months

DCC Technology (Exertis), has reported that strong operating profit growth for the six months ended 30th September 2019.

Operating profit increased by 42.6% (38.1% on a constant currency basis) with the performance driven by the contribution from acquisitions completed in both the current and prior years.

During the first half of the year, the UK business was increasingly impacted by general weakness in the UK technology market, reflecting the more difficult economic environment of recent months. This slowdown particularly impacted demand in the consumer and enterprise channels. Following the pilot transition of a component of the UK business to the new ERP system last year, the remainder of the business will transition to the new ERP system on a phased basis shortly following the end of the financial year. The upgrade is expected to significantly enhance the capability of the business to service both its customers and suppliers.

The business in Ireland performed well, generating good operating profit growth on the back of a strong retail market and an expansion of its B2B service offering.

Donal Murphy, chief executive of DCC Group, said: “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 business in the Nordics generated strong revenue growth, especially in the AV and IT product categories, and continues to drive efficiencies on the back of investments made in the operating infrastructure in the prior year. In Western Europe, the acquisition of Amacom, which services retailers across the Netherlands, has performed well since its acquisition in June 2019 and will provide additional service capability to support the growth of DCC Technology’s consumer proposition.

The B2B business also performed in line with expectations and continues to invest in its audio-visual proposition, with the business’ offering in this area being further supported by the recent acquisition of Comm-Tec in Germany and a small bolt-on acquisition in the Benelux region. The business in the Middle East performed well and continued its track record of
achieving organic revenue and operating profit growth.

During the prior year, DCC Technology acquired both Stampede and Jam, providing DCC with platforms for growth and development in North America in the Pro AV, Pro Audio and consumer electronics markets.

The firm says these acquisitions represented a “significant step in DCC Technology’s strategy to extend its geographic footprint and product range, strengthening its partnership with existing suppliers while also broadening its base of customers and suppliers”.

Both businesses have been integrated successfully and traded in line with expectations during the first half of the year delivering organic profit growth. The good performance was driven by strong demand for display and projector products from the hospitality and government sectors in the US in particular, and the business also saw good demand for Pro Audio and professional event lighting products.

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