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News : Irish Last Updated: Nov 10, 2009 - 8:41:34 AM

DCC reports operating profits for six months to end September up slightly to €48.8m
By Finfacts Team
Nov 10, 2009 - 8:38:36 AM

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DCC, the diversified business services group, today reported pre-tax profits, before exceptionals, of €48.8m for the six months to the end of September, up slightly from €47.29m reported the same time last year.

Revenues for the six month period fell 11.6% to €2.808 billion.

DCC said group operating profit, on a constant currency basis, increased by 0.9%.

The group said DCC Energy, the largest division, achieved excellent operating profit growth reflecting the successful integration of a number of recent acquisitions and good operating cost management. Computer services unit DCC SerCom also performed strongly. Both DCC Healthcare, DCC Environmental and DCC Food & Beverage experienced difficult trading conditions and, as a result, operating profit in each of these businesses declined in the period. 

Approximately 73% of DCC’s operating profit in the period was denominated in sterling.  The average exchange rate at which sterling profits were translated during the period was Stg£0.8809 = €1, compared to an average translation rate of Stg£0.7930 = €1 for the same period in the prior year, an adverse movement of 10%.  The adverse translation impact on Group operating profit was €4.6 million, resulting in an operating profit decline of 6.7% on a reported basis.

The company said it expects its operating profit for the year to the end of March 2010 will be broadly in line with last year, despite the uncertain business environment. This is a modest improvement in its expectations from its last trading update in July.

DCC also announced today that it has reached a deal to buy Shell Direct Austria from Shell Austria for €18.3m.

SDA sells approximately 630 million litres of transport fuels and heating oils to domestic, commercial, agricultural and industrial customers throughout Austria. It is one of the leading fuel distribution businesses in Austria with a market share of approximately 11%.

DCC has also agreed to enter into a long term supply arrangement with Shell in Austria and, following acquisition, SDA will operate as a Shell branded distributor.

The deal is subject to approval from the European Commission and is expected to complete in January 2010.

Goodbody analyst Dan Cavanagh commented: "The deal represents the second major step into Continental Europe, following the acquisition of Shell’s Danish distribution business in May 2009 and, as outlined in our report (All Energised - published 27th August), sees DCC continue to deploy its successful Energy distribution model into the larger European market.

On the outlook, whilst operating momentum is expected to continue into more important H2, taking into account weaker sterling (guided FX move up to 90p from 82.6p), management reiterated its earnings guidance issued at the AGM in July of an operating profit decline of 5-10% yoy, which compares to our current estimates of €166m (-8%). Whilst we will seek further details at the Analyst briefing, at first glance we would expect to be making modest upgrades (1-2%), which would take our full year adj. EPS to c.157 cent vs. our current estimates of 155 cent."

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