DCC revises full-year profit forecast downwards

Group says that its energy division has been adversely impacted by mild winter weather

Demand for energy fell in December due to milder weather conditions, leading DCC to revise its full-year operating profit estimates downwards. Its energy division distributes oil and liquefied petroleum gas (LPG)  in Europe. Photograph: Rui Vieira/PA Wire

Demand for energy fell in December due to milder weather conditions, leading DCC to revise its full-year operating profit estimates downwards. Its energy division distributes oil and liquefied petroleum gas (LPG) in Europe. Photograph: Rui Vieira/PA Wire

Mon, Feb 17, 2014, 16:35

Energy and distribution group DCC reported growth in operating profit for the third quarter this morning, as the London-listed group benefited from strong growth in DCC SerCom and DCC Healthcare. However, the “particularly mild weather” in December has affected trading negatively in DCC Energy, the group’s largest division, resulting in the group revising its full-year operating profit forecast downwards.

“Both volumes and margins were adversely impacted by the milder weather conditions across Northern Europe, particularly in December when average temperatures were well above the 10 year average,” the group said.

Despite the revision, Davy Stockbrokers said this morning that it continues to see “DCC as a strong performer in its markets”.

Year-to-date, the group has spent £85 million on acquisitions, some £66 million of which was committed in the third quarter, with potentially more in the pipeline.

“DCC retains a strong equity base, long term debt maturities and significant cash resources, which leave it very well placed to continue the development of its business in existing and new geographies.”

Looking to the quarter to March 31st, the group said that it is its “most significant trading quarter and is heavily influenced by trading in DCC Energy”. Given the mild winter weather, the group is now forecasting that its full-year operating profit and adjusted earnings per share will be in the range of 7 - 10 per cent ahead of the prior year, down from the previous estimate of 15 per cent and 13 per cent ahead respectively.