DCC profits fall 11% to €31.2m

RESULTS for the first half year at DCC show that profits before tax fell 11% to €31.2 million from €35.2m as the slowdown in global activity impacted on results.

Shares in the group which serves the IT, healthcare, food and energy sectors, fell 50c in Dublin yesterday as the earnings outlook for the group got significantly cloudier.

Shares hit a high this year of €12.25 and a low of €9.

Earnings per share rose 2.2% over the period and the expectation is that with a better outturn in the second half, EPS will increase by about 10% year-on-year.

That is well down on the 20% EPS growth DCC achieved prior to the impact of the economic downturn.

Despite the setback, the group has increased its interim dividend by 15% to €11.75c per share.

For the six months ended 30 September 2003, sales from continuing activities fell 4.1% to €975.1m in the period as profits in the computer and food sectors fell, due to slowing demand.

Operating profit from continuing activities grew by 3.4% to €41.2m an underlying increase of 5.6% when adjusted for the impact of weaker sterling.

The group's IT distribution business, SerCom, recorded an operating profit of €11.6m, a decrease of 15% over the first half period.

DCC's food business was hurt by the slowdown across the Irish grocery and food service sectors resulting in a 13.8% fall in its operating profits to €5m.

Its associate, Manor Park Homebuilders, the recent buyers of Charles Haughey's mansion in North Dublin, enjoyed profit growth of 40.2% to €6.1m at operating level, driven by a high level of home competitions.

DCC chief executive and deputy chairman Jim Flavin said: "DCC's business is significantly second-half weighted and the group expects good underlying growth in the second half although the reported rate of growth will be held back by the adverse impact of weaker sterling on the translation of British profits".

Analysts expect DCC will weather the present slump and up its earnings performance as it moves into the next financial year, provided the economic recovery underway is maintained.