DCC expects fall in first-half profits

DCC, a distributor of energy and computer games, said sales in the first quarter were behind last year’s.

As a result first-half profits will be less than the same period last year, it said in a trading update yesterday.

Despite the lesser earnings anticipated for the first six months, it said: “The group’s outlook for the year to 31 March 2010 remains unchanged from that set out in DCC’s preliminary announcement on 19 May 2009.”

It warned, however, the strength of the euro against sterling will knock up to 10% off its earnings in the current year.

While sterling has strengthened modestly since 19 May 2009, the impact of the translation into euro of the significant proportion of DCC’s sterling earnings “would still result in reported operating profit being in the range of 5% to 10% behind last year”, the group said.

In the first three months, operating profit for its first quarter to 30 June 2009 was ahead of budget, on a reported and constant currency basis, although, as anticipated, it was behind the first quarter of last year.

DCC’s largest division – energy – was ahead of budget with earnings broadly in line with the first quarter of the prior year, despite the fact that the particularly cold weather in April 2008was not repeated this April, it said.

SerCom, DCC’s next largest operation, traded ahead of budget in the quarter, but was modestly behind the prior year on a constant currency basis.

Its other businesses, including healthcare and food distribution, were impacted, relative to the first quarter in the prior year, by the effects of the marked economic slowdown.

Shares in the group were buoyed by the unchanged outlook and were up almost 3% up in early trading to €14.90.

NCB Stockbrokers said the result was positive coming in “ahead of budget”.

“We have already reduced our EPS estimates for the current year and do not expect to change this following today’s announcement.

“The strengthening of the euro against the sterling in the last few weeks will be a positive for the group,” it said.

DCC expects to announce its interim results for the six months to 30 September 2009 on Tuesday 10 November 2009.