DCC posts 'excellent' 20% pretax profit rise

BUSINESS SUPPORT services company DCC has reported a 20 per cent growth in pretax profits for the year ended March 31st, 2010, beating estimates and analysts’ expectations.

An “excellent performance” in the second half of the year boosted profits according to the company, with growth in its energy, healthcare and distribution and logistics divisions offsetting falling profits in the group’s smaller environmental and food and beverage units.

On a constant currency basis, overall pretax profit was up 27 per cent to €164.9 million. Operating profit rose by 6.9 per cent – 12.8 per cent on a constant currency basis to €192.8 million.

Pretax profits before exceptionals and amortisation was up 14.1 per cent at €182.1 million and 20.7 per cent stronger on a constant currency basis. Three-quarters of DCC’s profits are denominated in sterling.

The company’s energy division – which constitutes almost 60 per cent of profits – was the main driver of growth, with operating profits rising by 12.3 per cent to €113.1 million, driven mainly by rising energy demand due to cold weather conditions. Operating profits at DCC SerCom, the company’s IT and entertainment distribution unit, rose by a more modest 1.7 per cent to €40.8 million mainly due to significant profit growth in retail and reseller distribution in Britain.

DCC Healthcare was boosted by a strong performance in the hospital supplies and services division, which drove operating profits 22.2 per cent higher to €21.1 million. Meanwhile DCC Environmental saw a decline of 9.1 per cent in operating profits to €9.3 million, due mainly to a difficult trading environment in Ireland and exposure to the construction trade. Difficult trading conditions impinged on the company’s food and beverage division, which saw operating profits fall by almost a third to €8.5 million.

Adjusted earnings per share came in 5.2 per cent stronger than the previous year at 177.98 cent and were 11.3 per cent stronger on a constant currency basis. The company has proposed a final dividend of 43.70 cent per share. When added to the interim dividend of 23.74 cent per share, the company will pay out a total dividend of 67.44 cent per share, up 8.2 per cent on the previous year.

DCC also significantly reduced its net debt to €53.5 million last year, and now has a net debt to Ebitda (earnings before interest, taxes, depreciation and amortization) ratio of 0.2. The company said this “very strong financial position” gives it the capacity to pursue an increasing number of acquisition opportunities.

DCC said its outlook takes into account the “continuing uncertain economic outlook” and an assumption that the weather pattern will not be as favourable as in the last two years. Nonetheless, it is forecasting an operating profit increase of 5 per cent for the year to March 31st, 2011.