DCC sells Altimate with €8m loss

Support services giant DCC has sold part of its consumer goods distribution arm, taking an €8m loss in the process.

Dublin-based multi-faceted DCC has agreed to dispose of its Altimate Group subsidiary, which represents the enterprise distribution division of SerCom — DCC’s consumer and electronic goods distribution arm — to US headquartered computer product and technology distribution group, Arrow Electronics for more than €48m.

The Colorado-based group — which is listed on the New York Stock Exchange and already has a sales presence in Ireland — will pay an initial €41m of the total €48.1m consideration in cash, with “deferred acquisition consideration obligations” amounting to €7.1m.

However, DCC has said the deal will hit it with a non-cash exceptional loss of around €8m, resulting from the non-recovery of a portion of the goodwill arising since its acquisition 12 years ago. The Altimate business generated an operating profit of €3.7m in DCC’s last reported financial year, up to March 2011.

The sale is conditional on formal approval from the European Commission.

“This disposal of Altimate is consistent with our strategy to concentrate the focus of DCC SerCom’s distribution activities on its retail and re-seller distribution businesses and significant opportunities for further organic and acquisition growth,” said DCC’s group chief executive, Tommy Breen.

Yesterday’s news — on the back of which DCC’s share price rose by just under 0.5%, to €18.89 — marks the group’s first bit of transaction business this year; and follows on from it adding to its energy division, through the €23m takeover of Swedish firm Swea Energi in December.

Back in January, DCC warned its full-year operating profits — for the 12 months to the end of last month — would likely amount to between €175m and €190m, considerably down on previous estimates and technically representing a second profit warning in as many months.

Unseasonably warm weather during the group’s third quarter (the three months to the end of December) — particularly important trading periods for both its Energy and SerCom divisions — dragged profits down.