INDUSTRIAL HOLDING company DCC is buying an oil distribution business in Austria in a deal worth €18 million.
The group, which has businesses in energy, IT and waste management, said yesterday that revenues were down 11.6 per cent to €2.8 billion in the six months to September 30th, the first half of its financial year.
Operating profits were down 6.7 per cent at €56.6 million. Sterling’s weakness hit revenues and profits during the six-month period. On a constant-currency basis, its operating profits were up 0.9 per cent, while sales fell 4.3 per cent.
DCC said yesterday that it has conditionally agreed to buy Shell Direct Austria (SDA), the oil giant’s distribution arm in Austria.
The group said its investment in the company will come to €18.3 million. The deal is subject to approval by the EU Commission’s competition regulator but is expected to go through in January.
SDA has 11 per cent of the market, selling about 630 million litres of transport and heating oil to householders, farmers and businesses throughout Austria.
DCC has entered into a long-term supply arrangement with Shell in Austria, and the business will operate under the oil major’s brand.
DCC will acquire €2.1 million in net assets when it takes over SDA. The group said it expects the Austrian business to generate a return on capital broadly in line with its other energy businesses.
DCC chief executive Tommy Breen pointed out yesterday that global oil companies such as Shell are increasingly selling distribution businesses and concentrating on the more profitable activity of discovering and refining oil.
DCC’s energy division’s expertise lay in generating profits from fuel distribution, he added.
The energy division generated €1.79 billion in sales during the six months ended on September 30th, a 4.7 per cent fall on its €2 billion turnover during the same period in 2008.
Operating profits grew 11 per cent to €25.2 million.
Sales at its IT business, Sercom, were up 4.2 per cent during the six-month period at €665.1 million, and returned an operating profit of €13.5 million, which was a 1.5 per cent increase on 2008.
DCC Healthcare, which has businesses in hospital supplies and health and beauty, had sales of €163.8 million, down 5.2 per cent, while operating profits fell 11.7 per cent during the first half to €8.7 million.
Its environmental services arm, which has a big exposure to the depressed Irish construction sector through its hazardous waste business, suffered a 23.8 per cent fall in sales to €36 million, and a 35.7 per cent drop in operating profits to €4.7 million.
