DCC expects full-year earnings growth of up to 15 per cent on a constant currency basis but said exchange rate fluctuations mean overall earnings will be “approximately in line” with 2007.
The industrial holdings group, which has a heavy exposure to sterling's weakness against the euro, said if exchange rate movements were excluded earnings were expected to show growth of 13 per cent to 15 per cent in the year to March 31st.
However, the sterling area accounts for 72 per cent of total profits and DCC highlighted the pound had weakened significantly towards the end of the year. The impact of this weakness and an average exchange rate of 83 pence would see full-year earnings “approximately in line with those for 2007".
In 2007 the company reported pre-tax profits of €181.7 million.
Should the exchange rate remain at its current level of 90 pence per euro in the year until March 2010, operating profit would be reduced by approximately €10 million, DCC said in an interim statement today.
The “increasingly difficult” trading conditions, particularly for its Irish businesses would also impact on results the companyadded.
The group’s performance was driven by its energy division, DCC Energy which achieved “substantial operating profit in the quarter” due to the recent cold weather in Britain and Ireland and the integration of acquisitions.
The group’s second largest unit DCC Sercom, which is involved in technology and telecoms services, achieved “double digit operating profit growth on a constant currency basis”.
Tommy Breen, DCC chief executive, said the group’s "strong balance sheet leaves us well placed both commercially and financially to take advantage of opportunities arising in these more challenging times".
DCC’s healthcare and environment units endured “more difficult than anticipated” trading conditions and operating profit at both had declined. Its food and beverage unit has also seen a decline in profits.
In a briefing to investors Bloxham Stockbrokers said the group’s energy unit had benefited from a colder winter and noted it was forecasting “excellent overall revenue and operating profit growth” in its third quarter 2008.
Bloxham notes DCC has spent €21 million on acquisitions since September 30th last.
Davy’s described the statement as “encouraging in the current environment” and is considering raising its full-year earnings per share forecasts.
DCC shares rose marginally this morning before slipping back to €11.27 by 9.45am in Dublin, a gain of 2 cent, giving the company a market value of €929 million.
Yesterday DCC appointed Glanbia group managing director John Moloney as a non-executive director. Mr Moloney has been a director of Glanbia since 2001 and has held a number of senior management positions at the food and ingredients group.
The company is due to publish its annual results on May 19th.
