DCC has said that first quarter trading levels across all of its divisions were up on a year-on-year basis and that full-year operating profits should still increase by around 5%.
Management told shareholders at the group’s annual general meeting in Dublin, yesterday, that group performance during its first quarter – the three months to the end of June – had been “modestly ahead of expectations” and that each of the group’s five divisions (healthcare, environmental, energy, food/beverages and IT distribution) “traded ahead of, or in line with, the same period in the prior year”.
The group’s interim management statement, published in conjunction with yesterday’s AGM, added management’s thoughts that the early showing for the year was “encouraging”.
In its last financial year, DCC reported a 27% increase in pre-tax profits to €164.9 million with operating profit up by more than €12m at €192.8m. It again reiterated the current financial year – up to the end of next March – should see its operating profits increasing by 5% and earnings per share levels growing modestly. DCC is also likely to consider further acquisitions, particularly in the areas of energy and healthcare following a combined €36m spend on bolt-on buys during its first quarter.
The majority of that spend was carried out by the group’s energy division and was largely clawed back by the €30m sale of the “mobility & rehab” arm of the healthcare division to US firm, Patterson Medical. The group’s management said the diversified nature of the business, along with its strong financial position and “excellent cash generation” mean that it is well positioned to benefit from acquisition and development opportunities “that arise”.
In regard to market reaction on the back of yesterday’s meeting – Bloxham Stockbrokers said it was increasing its full-year earnings per share forecasts for DCC by 2.3%; or from 187.2c to 191.5c. DCC’s share price was up by 20c at €18.57, in early trading yesterday before closing the week up by just 7c at €18.44.
However, Caren Crowley at Davy Stockbrokers was more conservative, saying the trading update signalled a good start to the year, but that the first quarter is traditionally a quiet trading period for DCC and “it is not wise to extrapolate too much from this period”.
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