DCC says Covid measures having ‘significant impact’ on operations

The global measures being taken to mitigate the impact of the Covid-19 pandemic continue to have a "significant impact" on employees, customers and business operations at diversified energy and services group DCC, its chief executive Donal Murphy has said.

The company published a first quarter trading update for the period ended June 30th, 2020, on Friday. It said the trading performance of the group has “continued to improve” in the seasonally less significant first quarter since its last update on May 19th.

“Trading for the first quarter was resilient and ahead of the group’s expectations at the time of the last update, although behind the prior year due to the severe lockdown restrictions in place during April and May,” it said.

Operating profit in DCC LPG (liquefied petroleum gas) was behind the prior year due to weakness in commercial and industrial volumes, particularly in Britain and Ireland.

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Notwithstanding a relatively warmer start to the year, the increase in time spent at home by consumers meant domestic and retail cylinder demand “was strong” during the quarter across most of DCC LPG’s markets.

DCC Retail & Oil “performed well” in the quarter, driven by good performances from both the British and Danish businesses.

“The good performances reflected strong demand from agricultural customers and very strong demand in the domestic sector, where customers sought to secure supply during the uncertain lockdown period,” it said.

“Although overall volumes for the quarter were well behind the prior year due to the reduced demand for transport fuels, the positive mix impact of the strong domestic and agricultural performance, the gradual recovery in transport fuels volumes through the second half of the quarter and a good cost performance delivered operating profit modestly ahead of the prior year.”

Operating profit in DCC Technology was behind the prior year, although trading “improved steadily” through the quarter.

The business benefited from good underlying demand for consumer technology products in the e-tail and non-traditional retail channels.

DCC Healthcare “performed strongly” during the quarter, with operating profit well ahead of the prior year.

DCC Health & Beauty Solutions saw “strong demand” for nutritional products and benefited from the first-time contribution from the prior year acquisitions in the US of Ion Labs and Amerilab.

DCC Vital experienced “very strong demand” for Covid-19 related products, which offset the impact of substantially lower routine hospital procedures and in-person consultations.

In terms of outlook, DCC said that whilst the sustained uncertain environment created by the pandemic continues to impact all economies, DCC has “a diverse and very resilient business model, leading market positions and an extremely strong balance sheet”.

DCC chief executive Donal Murphy said: “The global measures being taken to mitigate the impact of the pandemic continue to have a significant impact on our employees, customers and business operations.

“All DCC business units have operated effectively during the quarter, ensuring our customers continue to receive the range of essential products and services we provide.

“Although a seasonally quieter period for the group, I have been pleased with the performance of each of DCC’s divisions during the quarter. The trading performance of the group has been very resilient, considering the significant challenges presented by the necessary restrictions.”

Mr Murphy said the company remains ready to capitalise on any acquisition opportunities that present themselves.

“The improving performance through the quarter has meant we have recommenced selective organic development capital expenditure to ensure we are in a position to capture any opportunity for market share gains during this period,” he said.

“DCC’s diverse, resilient business model and financial strength ensures the Group is in a very strong position to navigate through the ongoing uncertainty.

“DCC remains active from an acquisitive development perspective and the group continues to have the platforms, opportunities and capability for further development across each of our four divisions.”

The company holds it annual general meeting later on Friday.