DCC set to grow as profit swells by 27%

Industrial holding group DCC plans to expand its computer distribution to Europe and wants to expand its oil distribution business in either the Republic or Northern Ireland, its chief executive has said.

As DCC reported a 27 per cent increase in pre-tax profits to €59.2 million (£46.6 million), Mr Jim Flavin said that, while the group's Sercom division was strong in Ireland and the UK, "we would like it to be a pan-European distributor". Last year, DCC increased its stake in its three Sercom subsidiaries - Micro P, Gem and Sharptext - to 100 per cent at a cost of €8.3 million (£6.5 million).

Last year, DCC expanded its energy operations into fuel distribution with the acquisition of the Burmah business in Ireland. Mr Flavin said it was unlikely that DCC could expand its LPG interests but added that the group would like to add to its oil business. DCC results were slightly ahead of expectation, tending to underpin recent gains in the share price to a 12-month high of €8.75. Sales were up almost 19 per cent to €1.06 billion (£834 million), earnings per share were up almost 26 per cent to 57.2 cents (45p) while the dividend has been raised more than 20 per cent to 14.66 cents (11.55p). The group ended the year with a strong balance sheet, with gearing of just over 10 per cent.

Operating profits in the Sercom division were up 18.2 per cent to €18.3 million, although margins eased, with sales up almost 24 per cent to €416.5 million. Margins in the energy business, which takes in LPG and petrol distribution, improved sharply with operating profits up almost 38 per cent to €18.2 million, while sales were up 20 per cent to €193.3 million. Last year, DCC bought the Burmah business for €17.1 million, giving the group its first presence in the petrol retail market.

DCC Foods, which includes 50 per cent of the Kylemore baking and cafes business, also showed good growth in margins, with operating profits up 16 per cent to €15 million while sales were up by 7 per cent to €314 million. The group's Allied Foods chilled foods distribution business won two new contracts with SuperValu and Superquinn.

The healthcare division, which takes in hospital supplies as well as mobility and rehabilitation aids, saw profits grow 36 per cent to €9.8 million, while sales were up 41 per cent to €114.8 million.

In addition, DCC took in 10.3 per cent of Fyffes' operating profits into its accounts, while its 49 per cent stake in housebuilder Manor Park Homes was largely responsible for the 5 per cent increase in operating profits in "other interests" to €2.4 million.