DCC Technology upbeat after strong fiscal year numbers

Channel player DCC Technology has yet to see the long-term impact of its largest acquisition and is already successfully navigating through challenging times

Exertis is expecting the momentum it built up over the past fiscal year to continue as it starts to reap the benefits of acquisitions sealed in 2021.

Last year saw the channel player seal its largest acquisition and pick up Almo to add more depth to its Pro AV business, as well as giving the organisation the opportunity to generate more revenues in North America.

Tim Griffin, managing director at DCC Technology, said that Exertis parent DCC Group was diversified across technology, healthcare, oil and gas, but had also been expanding its geographical footprint.

The positive consequences of that could be seen in the fiscal year results for the 12 months ended 31 March, with revenue improving by 32.2% to £17.732bn from £13.412bn. Operating profits for the complete business improved by 11.1% to £589.2m.

The technology unit delivered a 12.8% year-on-year improvement in operating profits to £81.7m up from £72.4m. Revenues ticked up by 3.6% improving from £4.483bn to hit £4.644bn.

Exertis UK was hampered by supply issues and consumer activity was a concern, but the business was helped by strong growth in North America and the recovery in demand for business-to-business products in DACH and Italy.

“The short-term momentum is really a function of what has been a very large acquisition [of Almo] that we made in the year, which was the biggest acquisition that the DCC has made to date,” added Griffin. “We’ve obviously acquired that mid-year. Having had only four months benefits of [the acquisition] this past year, we’ll get a full year next year, so we’re pretty confident that we can sustain growth into the next year.”

Griffin said that everyone was wrestling with challenges of inflation, component shortages and the ongoing impact of the pandemic, but it had managed to deliver these results with those challenges already affecting the business.

He said that dealing successfully with supply issues, economic pressures and staff was where the strength of the employees at Exertis came into their own: “The work that the team does to be able to find a way to win, that’s testament to their resilience, their tenacity and their expertise – they’re all specialists in their field.

“Everybody will talk extensively about the context and the challenges of the global economic environment, whether or not it’s the pandemic or consumer sentiment or supply chain, and finding a way to win in that kind of environment is just an amazing performance by the team and talks to the strength of our kind of investment hypothesis around diversity.

“There’s a degree of uncertainty around the economic environment, but we think we’re very well positioned to tackle that and deliver another stellar year next year,” Griffin added.

The Almo deal

In December 2021, DCC Technology swooped for Almo Corporation, which added more depth to the distributor’s Pro AV business, based on an initial enterprise value of $610m.

Along with its audio visual (AV) expertise, Almo included a mainstream appliance business, selling kitchen packages to retailers across the US, and a foothold in the consumer appliance and lifestyle markets.

The AV side of the business has already been integrated, and the addition made a contribution in the four months that it was owned during fiscal year 2021. The expectation is that it will make a positive impact even more when DCC gets a full year’s contribution out of the business.

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