DCC trading ahead of expectations in first quarter

BUSINESS SERVICES group DCC reported a “solid” start to its financial year, with trading ahead of expectations.

In the first quarter ending June 30th, the group said growth in operating profit on continuing activities was “good” and overall trading was ahead of predictions.

Its largest division, fuel sales and distribution firm DCC Energy, showed good organic volume growth, trading ahead of last year and ahead of budget. The group noted, however, that the division’s profits, boosted by colder weather, were heavily weighted towards the second half of its financial year.

Meanwhile, performance at DCC SerCom, which provides distribution, procurement and supply chain services, was broadly in line with expectations in a challenging trading environment.

DCC’s healthcare and environmental divisions were also ahead of last year, while DCC Food Beverage, owner of the Kelkin and Robert Roberts brands, continued to be hit by the loss of a logistics contract in 2011.

DCC reiterated its previous guidance for the year to March 31st, 2013, with operating profit and adjusted earnings per share both expected to be 15 per cent higher on a constant currency basis.

In the quarter, DCC spent €25 million on acquisition targets including deferred payments, buying Medical Gas Solutions in April, Dutch communications business Go Telecom in May, and Vitamex Manufacturing in June.

“The group remains in a very strong financial position and is actively pursuing a range of development opportunities,” DCC said.

At the company’s agm yesterday, chief executive Tommy Breen said overall revenue to March 31st, 2012, had climbed 25 per cent to €10.69 million. Operating profit was down 18 per cent to €185 million.

Chairman Michael Buckley said an 18.4 per cent fall in adjusted earnings per share on a constant currency basis was disappointing.

With DCC Energy accounting for 45 per cent of the company’s profits, he attributed the drop, which breaks 17 consecutive years of growth since flotation, to “an exceptionally mild heating season, high oil prices, a sluggish UK market and the high profit bar set in the previous year”.

Asked why the company continued to be so heavily weighted towards weather-dependent oil businesses, Mr Buckley said DCC’s strategy was to further expand into non-heating-dependent areas.

Mr Breen said he was “pleased” with the performance of the non-energy divisions which increased their profits by 11 per cent.

The group is set to announce its interim results on November 6th.