Dixons Carphone delivered “excellent” performance in its first full year as a merged business as sales and profits rose. This is what the analysts said.

Dixons Carphone delivered “excellent” performance in its first full year

“From this statement we can see the progress Dixons has made in a declining and deflationary UK market, especially across most large and small electrical categories and mobile. As we stated at the June quarter-four interims, we believe Dixons’ improved customer service, pricing and use of iPads to facilitate sales in-store has led to a significant outperformance gap opening up with John Lewis in 2014 and into 2015. This performance gap is after adjusting for the benefit of the transfer of sales from the closed Phones 4u stores.

“In addition, and most encouragingly, is the announcement of new contracts with Connected World Services (CWS), like Sprint in the US. We see significant upside in profits within the higher margin CWS operations as more mobile operators and product manufacturers (Apple) look for tried and tested store solutions.”

Mike Dennis, Cantor Fitzgerald

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“A strong year for Dixons Carphone, characterised by market share gains in core business units and material operational leverage being delivered in its largest segment. In addition, an improved UK mobile market is allowing for data usage growth and 4G roll-out.

“The outlook statement remains upbeat and CWS continues to show encouraging levels of profitability. Valuation remains undemanding with self-help, restructuring and market share gains to drive robust earnings growth. For FY16, focus on CWS will be its recently announced joint venture with Sprint. If successfully rolled out, it could add £35m to £40m (6% to 7%) to FY18/19 profit before tax on our estimates.”

Alistair Davies, Investec

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“Good progress is being made on all five key value drivers for the group, namely the core business, core business opportunities, synergies, CWS (B2B) and Services (B2C). Today’s results have been driven by the first three areas, with the two service-based initiatives looking set to deliver benefits over the medium and longer term.

“FY16 will follow a similar pattern to FY15 in our view, with synergy benefits starting to kick in more strongly and underpinning growth prospects. The recent CWS announcement on a joint venture to develop standalone stores for the network operator, Sprint, in the USA is a very good pointer to the sales and profit potential from CWS in our view.”

David Jeary, Canaccord Genuity

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“There was little room for surprises today as the company had already reported sales and guided tightly on full-year profit before tax. Nonetheless the final FY15 headline PBT of £381m presents a small 1.3% beat.

“More importantly, the earnings momentum in the business remains positive while management’s optimistic outlook will likely keep the positive mood going. Diving into the detail of the results, the UK has performed significantly better than consensus expectations, while the Nordics were impacted by an adverse £11m foreign exchange hit. CWS recorded an £8m profit but with the deal with Sprint in the US, we are optimistic these profit numbers can rise exponentially in the medium term.

“The balance sheet is strong and although the final dividend yield of 1.8% is not as exciting, we see scope for that to increase in the coming year. The disposal of Portugal, albeit not as material for group profitability, shows strong management will to focus on the core. We recognise the challenges in the Greek business but we highlight this is a very small part of the group’s profitability.

“We reiterate our longer-term positive stance on the company as Dixons Carphone has in our view the most solid earnings outlook in our coverage universe.”

Christodoulos Chaviaras, Barclays