The board of DCC remained unrepentant in the face of shareholder criticisms of its conduct following the Supreme Court’s decision against the company’s former executive chairman, Jim Flavin, in the Fyffes insider trading case.
At its annual general meeting today a number of shareholders accused the board of giving the "two fingers" to the highest court in the land in relation to its support Mr Flavin who was found by the Supreme Court last summer to have engaged in illegal share dealing when selling Fyffes shares on behalf of DCC.
"The conduct of this board has fallen well short of the mark," said shareholder Seamus May, who said that the board's role in supporting Mr Flavin was one of the reasons why international confidence in Ireland was waning.
"The international investment community has lost confidence in corporate Ireland which is little wonder when you look at the outrageous conduct of the members of the board before us," he said.
He said confidence in the board could not be restored and that the company should be broken up with the value returned to the shareholders.
Another shareholder said the stance of the board served to minimise Mr Flavin's actions.
The importance of the Supreme Court decision was not accepted or acted upon by the board, this shareholder said.
DCC chairman Michael Buckley strenuously defended the board's conduct during the case and in the aftermath of the Supreme Court ruling which found against the then executive chairman Mr Flavin.
"I want to refute the notion that the board of DCC disrespected the Supreme Court judgement," he said.
Mr Flavin's decision to step down was a "very difficult, personal" one made in the interests of the company. He described him as one of the truly outstanding business builders of his generation.
Earlier today DCC said it expects annual earnings to be "in line with those reported last year" at current exchange rates, restrained by sterling's decline against the euro.
In a statement, DCC said earnings before one-time items were expected to grow 10 per cent once currency fluctuations were omitted for the year ending March 31st, 2009.
DCC, which holds stakes in Scottish recycling company William Tracey and fuel distributor CPL Petroleum, generates around two-thirds of its operating profit in sterling.
The euro has risen 18 per cent against sterling in the last 12 months. The earnings calculation is based on an exchange rate of 80 pence to the euro.
Davy analyst David Jennings said in an investors' note this implies flat earnings growth year-on-year, when sterling euro movements are taken into account.
"This implies EPS of 164 cent (diluted adjusted) from 171 cent previously (we had been forecasting circa 4 per cent growth)", he said.
DCC said it had enjoyed an "excellent" first quarter to June 30th with its largest division, DCC energy, achieving "excellent profit growth" due to a colder April in Ireland and Britain.
The group's food and environment divisions reported "underlying double digit operating profit growth" although its healthcare unit was "held back by weaker than expected trading conditions in the acute care sector in Ireland".
While the company said it was encouraged by the strong start to the year, it noted the deteriorating economic conditions in its main markets and that group profits are weighted towards the second-half of the year.
The company said in May it expected profit to rise by 2 per cent to 5 per cent this year including currency swings, and that profit may rise as much as 15 per cent on a constant currency basis.
"Today's update is disappointing and will drive stock price weakness," NCB analyst John Sheehan said in a note.
"We had expected no change to forecasts in view of the favorable start to the year outlined in the May results presentation, though economic trends are clearly negative.'' Sheehan cut his earnings estimates by 8 per cent for 2009 and 10 per cent for 2010.
At 9.25am, DCC shares were trading down 2 per cent at €14.20 in Dublin, giving the company a market cap of €1.155 billion. DCC stock has lost over 26 per of its value this year, outperforming the Iseq index which has fallen over 31 per cent during the same period.
DCC's founder and executive chairman Jim Flavin resigned in May because of "uncertainty" following an insider trading case.
A court ruled last year that Mr Flavin had market sensitive information when he sold Fyffes shares in 2000.
The company spent €180 million on purchases in the year through March, and said in May it continued to look at potential acquisitions.
Net income climbed 17 per cent to €164.5 million in the year ended March 31st as DCC expanded the oil business and sold its homebuilding unit, Manor Park Homebuilders.
At 3.46pm DCC shares were trading up 2.4 per cent at €14.85, with the Iseq ahead 3.7 per cent.
Additional reporting Bloomberg