DCC profits grow 37% on solid performance

Profits at business support services group DCC rose by 37.5 per cent last year, driven by a solid performance across almost all divisions. Pretax profits for the year to the end of March rose to €138.8 million, up from €100.9 million in the previous 12 months.

The growth came as revenue climbed by 29.9 per cent to €3.4 billion and operating profit increased by 10.5 per cent to €123.6 million.

Jim Flavin, DCC's chief executive and deputy chairman, said the firm had "budgeted for continued good operating profit growth from subsidiaries in the current year".

The firm has declared a dividend of 42.85 cent per share, making an annual increase of 15 per cent. An upbeat Mr Flavin said the firm still had scope for dividend growth and share buybacks. A breakdown of the numbers shows that DCC took €25.5 million of its operating profits from Manor Park Homes, its 49-per-cent-owned associate. This was 51.6 per cent higher than last year's contribution, with DCC having signalled the strong trend at the start of April.

The company also indicated at that stage that the profit contribution from Manor Park could be "materially less" in the current year because of planning delays.

Mr Flavin reiterated this yesterday, but said Manor Park's landbank should allow it to deliver "substantial profits" in the future. DCC's biggest division, DCC Energy, posted operating profits of €56 million for the year, up 8 per cent. The division took support from two recent UK acquisitions, with sales volumes ahead by 19 per cent. The firm made no comment on reports that it wants to buy the Irish service station network and oil supply business of Norwegian oil company, Statoil. DCC had been linked with DCC in a joint purchase but is now said to be bidding alone for the unit, which the market believes could raise up to €200 million.

Sercom, DCC's IT and entertainment business, suffered a 4.9 per cent drop in profits to €25 million after a tough first half, despite improving conditions towards the end of the year.

In healthcare, the company posted profits of €21.6 million for the year, up 40.1 per cent. Acquisitions and a strategy of sourcing products in China helped here.

Prior purchases also boosted numbers in DCC's food and beverage division, where profits rose by 20.6 per cent to €15.5 million.

DCC drew €5.5 million in profits from its growing environmental division, marking only a 1.2 per cent increase on 2005.

The results included an exceptional provision of €8.5 million related to the costs DCC expects Fyffes to pay in respect of DCC's High Court costs in last year's insider trading case. Fyffes has since said it will appeal the decision.

Shares in DCC fell by 20 cent to €19.20 yesterday in a weak market.