Something like 10 years of unbroken growth in operating profits (as I think I recall reading in the company's 2010 de-merger scheme booklet), added to the subsequent 6 years, and we are heading for two decades of consistent growth.
There are very few companies that can make that sort of boast.
In the 6 years since the de-merger, DLX has doubled EPS and DPS has gone from 7.5cps to 23.5cps.
And even in the past financial year - a year in which a major distributor essentially held a firesale of competitor products - DLX has still reported growth in profits.
The significance of this should not be ignored.
In fact, it is instructive to observe the performance of DLX's core paints business since the company's disengagement from Masters in 2013:
What is remarkable about that performance is that it took place over what was a major supply-side shock, one seldom witnessed in industries: in the earlier part of that period, Woolworths was aggressively rolling out Masters stores and in the last 12 months they were basically liquidating all their inventories.
I don't think people appreciate what a formidable business DLX is given is performance against that unstable market context.
Under that sort of disruptive competitor action, many other businesses would have crashed or burned, and the overwhelming majority would certainly have been adversely affected in a meaningful way.
Very, very few would be able to come out the other end, not just totally unscathed, but with 20% more Sales and being 30% more profitable (!)
And looking at the substantial investment that they are making in the operating side of the business (manufacturing and supply chain), DLX is not a company that I would like to be competing against. As a competitor, you would not only have to be running in order to stand still, but you'd have to run faster and faster in order to just maintain your position.
While the headline growth number for the full-year might have appeared pedestrian to some (I still think it is an impressive achievement in the fact of a highly disrupted market place, as discussed above), growth in the second-half in the all-important Paints and Coatings business was faster than the first-half, namely 9% compared to 4% in the first half (at the EBIT level).
It's a veritable machine of a business, and one that I will happily hold for many a year to come.
My hope for DLX - which has been the case for a few years now (absent Aug/Sept 2016 opportunities to buy DLX have been rare for some time) - is that the market takes the view that the construction cycle is rolling over, looks at the 18.5x P/E multiple against that backdrop, and accordingly proceeds to sell the share aggressively.
Where are the short-sellers when you really want them?
DLX Price at posting:
$6.19 Sentiment: Hold Disclosure: Held
