DCC capitalises on big freeze with 15% profit rise

LAST WINTER’S adverse weather conditions helped to boost DCC’s performance for the year to the end of March, with the industrial holdings group posting a 15 per cent jump in pretax profits to €189.6 million.

Revenues at the industrial conglomerate increased by almost 30 per cent to €8.7 million.

The solid set of results were within most analysts’ estimates, while the 14.1 per cent growth in earnings per share was slightly ahead of the company’s earlier guidance of 13 per cent growth.

Profit-taking saw DCC’s share price slip six cent to €2.44 after jumping 25 cent on Monday ahead of the results.

All five of DCC’s divisions posted a profit last year, with group operating profit increasing by 15.5 per cent on a constant currency basis to €230 million. This follows operating profit growth of 13 per cent and 22 per cent on a constant currency basis in the preceding two years.

Operating profit at DCC’s energy division, which accounts for 60 per cent of the company’s profits, stood at €137.3 million for the year, an increase of 21.4 per cent on 2010. As was the case in 2009, adverse weather conditions benefited the company’s oil distribution in the United Kingdom, although trading in the fourth quarter was adversely affected by the milder weather conditions compared to the same period last year. DCC energy sold 7.1 billion litres of product – an increase of 15.5 per cent on the previous year.

DCC chief executive Tommy Breen said the company continues to focus on gaining about 20 per cent market share in the UK oil distribution business, a market which is relatively fragmented.

Following the completion of the acquisition of Pace Fuelcare announced in February, DCC will hold about 15 per cent of the UK oil distribution market.

The company said it strongly rejects allegations made in a Sunday newspaper that its British oil distribution business had been overcharging customers. A market study by the Office of Fair Trading into the offgrid market is due to conclude in the autumn.

The performance of DCC Energy’s LPG business was “satisfactory” during the year, though profitability was affected by rising oil prices, while volume in Ireland declined.

Elsewhere, DCC Sercom benefited from a strong performance by its reseller and retail divisions which each account for about 40 per cent of Sercom’s revenues.

DCC healthcare, environmental, and food and beverage, also posted an increase in profits.

While the company was cautious on outlook, DCC estimates operating profit and adjusted earnings per share will be broadly in line with last year. A dividend of 74.18 was paid during the year, an increase of 10 per cent on 2010.

DCC: full-year results for 2011

Revenue:€8.681bn (+29%)

Pretax profit:€189.6m (+15%)

Group operating profit:€229.6m (+19%)

Earnings per share:203.15 cent (+14%)

Dividend:74.18 cent (+10%)

Net debt:€45.2m

SUMMARY

It was a strong year for the industrial holdings group with all five divisions posting a profit. Overall, pre-tax profits increased by 15 per cent, or 10 per cent on a constant currency basis, to €189.6 million, while revenues were up almost 30 per cent to €8.6 billion. DCC’s energy division, which posted an operating profit of €137.3 million, remains the company’s largest division accounting for 60 per cent of profits.

The company said it would continue to explore acquisitions in the year ahead, and expected operating profit and adjusted earnings per share to be broadly in line with 2011.