Last checked at 3 Feb 2009 07:00
DCC plc
Interim Management Statement
DCC plc, the procurement, sales, marketing, distribution and business support services group listed on both the Irish and London stock exchanges, is issuing this Interim Management Statement in accordance with the reporting requirements of the Transparency Regulations 2007.
Quarter to 31 December 2008
DCC achieved excellent overall revenue and operating profit growth in its third quarter to 31 December 2008, notwithstanding the adverse impact of the weaker sterling/euro exchange rate on the translation into euro of DCC's sterling denominated profits and an increasingly difficult trading environment, particularly for its Irish businesses.
On a constant currency basis DCC Energy, DCC's largest division, achieved substantial operating profit growth in the quarter, benefiting from the integration synergies arising from acquisitions completed in recent years and the favourable impact of the much colder weather in Britain and Ireland compared to the same quarter last year. DCC's second largest division, DCC SerCom, achieved double digit operating profit growth on a constant currency basis in its seasonally most important quarter.
Trading conditions in DCC Healthcare and DCC Environmental were more difficult than anticipated at the time of the Group's interim results announcement in November 2008 and consequently operating profit declined in both of these divisions. As had been anticipated, operating profit in DCC Food & Beverage also declined.
Outlook for the year to 31 March 2009
Taking into account trading in January and the outlook for February and March, DCC's current expectation is to achieve approximately 13% to 15% growth in earnings1 on a constant currency basis in the year to 31 March 2009.
It is estimated that sterling profits will represent 72% of DCC's operating profit in the current financial year and, due to seasonal factors, 79% in the fourth quarter.
The sterling/euro exchange rate weakened significantly towards the end of the third quarter and, at the current exchange rate of approximately Stg£0.90, the average exchange rate for the year to 31 March 2009 would be Stg£0.83, compared to the average rate for the year to 31 March 2008 of Stg£0.70.
The translation into euro of the Group's sterling denominated operating profit at the weaker average exchange rate of Stg£0.83 would result in reported earnings1 for the year to 31 March 2009 being approximately in line with those reported last year.
Potential impact of current sterling/euro exchange rate in the year to 31 March 2010
If sterling profits in the year to 31 March 2010 were to be similar to those anticipated for the current year and the current sterling/euro exchange rate of Stg£0.90 was to prevail for the full year, operating profit would be adversely impacted by approximately €10 million.
Acquisition expenditure
The Group has committed expenditure of €21 million on acquisitions since 30 September 2008. DCC Energy has committed expenditure of €14 million, inclusive of the acquisition of the Cooke Fuel Cards business which was announced on 5 January 2009. DCC SerCom has committed €7 million on the acquisition of two enterprise distribution businesses, Mambo Technology based in Madrid and Numitor based in Brussels.
Preliminary Results
DCC expects to announce its preliminary results for the year to 31 March 2009 on Tuesday, 19 May 2009.
Tommy Breen, Chief Executive, commented
"DCC has achieved an excellent result in its third quarter to 31 December 2008, driven primarily by its largest division, DCC Energy. The Group is operating against a background of deteriorating economic conditions in its main geographic markets and is increasingly focused on cost efficiencies. Our strong balance sheet leaves us well placed both commercially and financially to take advantage of opportunities arising in these more challenging times."
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For reference:
Tommy Breen, Chief Executive
Fergal O'Dwyer, Chief Financial Officer
Conor Murphy, Investor Relations Manager
Telephone: +353 1 2799400
Email: investorrelations@dcc.ie
Web: www.dcc.ie
Forward-looking statements
This announcement contains some forward-looking statements that represent DCC's expectations for its business, based on current expectations about future events, which by their nature involve risks and uncertainties. DCC believes that its expectations and assumptions with respect to these forward-looking statements are reasonable. However, because they involve risk and uncertainty, which are in some cases beyond DCC's control, actual results or performance may differ materially from those expressed or implied by such forward-looking information.
About DCC plc
DCC plc is a procurement, sales, marketing, distribution and business support services group headquartered in Dublin with international operations across four continents. DCC has five divisions - DCC Energy, DCC SerCom, DCC Healthcare, DCC Environmental and DCC Food & Beverage. In its last financial year to 31 March 2008, DCC had sales of €5.532 billion and operating profit of €167.2 million and currently employs approximately 7,300 people. DCC's shares are listed on both the Irish and London stock exchanges under Support Services.