DCC profits flat after 40% drop in healthcare division

DISTRIBUTION and marketing group DCC suffered a 40% drop in its healthcare division performance, resulting in flat first-half profits to September, 30, 2002.

The results were flagged by Jim Flavin, DCC’s chief executive and deputy chairman at the annual general meeting in early July.

Pre-tax profits at DCC increased slightly in the last six months, from 34.7m euro to 38.7m euro.

But angered by the summary withdrawal of the Shoprider franchise DCC said yesterday it is “aggressively pursuing” the supplier for breach of contract.

Reflecting yesterday’s flat profit performance the share price stayed unchanged at 10.30 following publication of the results.

Commenting on the performance Mr Flavin said the figures were satisfactory under the circumstances.

They showed “resilience” in tough market conditions.

“DCC is well positioned to achieve strong growth in both the more significant second half of the current financial year and the next financial year.

“The longer term outlook remains very encouraging,” he said.

In its key markets the group did well in energy where profits rose 23.6% to 10.1m euro.

The IT distribution suffered from the high tech slump, achieving growth of just 3.2% in its operating results to 13.6m euro.

In food distribution the group’s operations boosted profits by 13.4% to 5.8m euro while its ancillary activities were strongly ahead increasing profits to 5.3m euro.

The results were achieved on sales that were up by 11.3% to just over 1 billion euro.

The group will pay an increased interim dividend of 10.217 cents, an increase of 10%.

Traditionally the second half has always been the stronger, boosted in particular by its energy distribution division.

That sector will get an additional boost in the second half when the acquisition of LPG division of British Gas is included in the figures for the first time.

That acquisition will double DCC’s presence in the liquid gas market in Britain to a 21% share.

This would make the Irish-based group the second largest player in the British market.

This acquisition was announced on 4 November.

Together with the Alta Gas takeover last year they should result in a significant profit boost to the group going forward, some of which will be reflected in second half results.