DCC's pre-tax profits soar 12.3% to €181.7m

SHARES IN DCC gained 3.84 per cent in a positive market to close at €15.68 as the industrial holding company reported a 12.3 per cent rise in pre-tax profits to €181.7 million for the year to March, writes Arthur Beesley.

Executive chairman Jim Flavin said that the firm, which has a heavy exposure to sterling's weakness against the euro, was likely to deliver growth of 2 per cent to 5 per cent in adjusted earnings per share in the current year at an exchange rate of 80p to €1.

This compares with 15 per cent growth in adjusted earnings to 165.06 cent per share last year.

Earnings growth this year on a "constant currency basis" is forecast to be in the 12 per cent to 15 per cent range, down from 17.4 per cent last year.

"DCC has had an excellent start to the current financial year and continues to be well-positioned both commercially and financially to augment growth through acquisition activity," Mr Flavin said.

While not naming any targets, he said DCC was examining opportunities. Mr Flavin, who was backed last year by the entire DCC board after the Supreme Court found he had engaged in insider trading when selling the company's stake in Fyffes in 2000, told reporters that he planned to deliver a strategic review to the board by the end of the current fiscal year. In an indication that he expected to remain in situ until his planned retirement in July 2010, he said he was on course to "follow through" on the strategy.

The DCC board will this week publish the corporate governance report dealing with the Fyffes case from its forthcoming annual report. The report itself will be sent to shareholders on June 16th.

While some institutional investors want DCC to bring forward Mr Flavin's retirement in light of the court ruling, Mr Flavin said it was his intention and the clear wish of his board that he continue.

DCC declared a final dividend of 36.12 cent per share, lifting the total dividend 15 per cent higher to 56.67 cent. Revenue rose 36.7 per cent to €5.53 billion. Operating profit excluding exceptional items and amortisation of intangibles rose 19.3 per cent to €167.2 million and was up 21.8 per cent on a "constant currency basis".

An exceptional pre-tax profit of €39.6 million reflected DCC's €94.7 million return from the sale of its 49 per cent interest in Manor Park Homebuilders. This was eroded by a €55 million charge incurred over the settlement of the Fyffes case and associated costs. Other once-off charges amounted to €5.1 million.

Sales in the energy division rose 52.1 per cent to €3.42 billion and operating profit rose 25 per cent to €74.3 million. In the SerCom distribution and supply unit, revenue rose 16.9 per cent to €1.42 billion and operating profit rose 22.9 per cent to €40.1 million.

The healthcare unit saw revenue rise 22.4 per cent to €286.8 million as operating profit rose 4.2 per cent to €23.5 million.

Revenue in the food and beverage business rose 11 per cent to €310 million and operating profit rose 1.6 per cent to €15.3 million.Revenue in the environmental unit rose 37.9 per cent to €91.7 million.