DCC set to keep profits at same level

DCC, which is involved in a wide range of distribution activities from energy to computer games, expects profits to be in line with last year.

Earnings on a constant currency basis are expected to rise 13% to 15% for the year.

The translation of British earnings, which account for 75% of the group’s total, will drag the figure back to last year’s level, DCC said in a trading update.

If sterling stays at its current level of 90p to the euro indefinitely, then the group warned that up to €10m will be wiped from the group’s projected earnings for 2010.

This year’s earnings growth will be driven mainly by strong contributions from the group’s energy and information technology units.

“The group is operating against a background of deteriorating economic conditions in its main geographic markets and is increasingly focused on cost efficiencies,” it said.

Its shares rose on the back of the trading statement and were up 10 cent to €11.34 by mid-afternoon.

The company described the overall revenue and operating profit growth in its third quarter to December 31, 2008, as “excellent” given the negative impact of a weaker sterling.

DCC Energy, the group’s largest division, achieved substantial operating profit growth in the quarter, benefiting from the integration synergies from acquisitions completed in recent years and the favourable impact of the much colder weather in Britain and Ireland compared with the same quarter last year.

Its second largest division, DCC SerCom, achieved double-digit operating profit growth on a constant currency basis in its seasonally most important quarter.

Its three other divisions, food and beverages, healthcare and environmental operations suffered declines in their operating profit over the period.

Tommy Breen, chief executive, said the group achieved an excellent result in its third quarter, driven primarily by its largest division, DCC Energy.