DCC PLC
12 September 2005
Trading and Outlook Statement
The Board of DCC wishes to update the market on trading and growth expectations
for the DCC Group for the current financial year to 31 March 2006. DCC's Energy,
Healthcare, Food & Beverage and Environmental divisions and Other activities,
which are budgeted to contribute over 80% of the Group's operating profit, are
expected to perform broadly in line with market expectations. However, following
a significant deterioration in trading conditions in July and August in DCC's IT
Distribution division, which contributed 21% of the Group's operating profit in
the last financial year, the Board now expects mid single-digit growth in DCC's
adjusted earnings per share in the current financial year.
IT Distribution
The tough trading conditions experienced in DCC's IT Distribution division since
late 2004 further deteriorated in July and August 2005.
The UK software distribution business, Gem Distribution, has been particularly
impacted by the sharp decline in retail consumer expenditure on technology and
entertainment products in July and August. While it is anticipated that the
games market will benefit from the forthcoming release of the Microsoft Xbox 360
console later this year, this is not expected to have a material impact in the
current financial year. In addition, very difficult trading conditions in the IT
hardware market and continuing severe product price deflation are impacting both
Micro Peripherals and Distrilogie, DCC's UK and Continental European IT
distribution businesses.
It is expected that the IT Distribution division's operating profits will
decline by approximately 45% in the first half of the financial year compared
with the first half of the prior year. However, with the benefit of the profit
contribution from the recently acquired Pilton Group, which is performing in
line with expectations, the division is expected to earn broadly similar profits
in the second half compared with the second half of the prior year. As the peak
trading period approaches, management is very focused on driving sales growth
and on margin and cost management.
Interim Results for the six months ended 30 September 2005
In light of the difficult trading in the IT Distribution business along with
the budgeted first time impact of the seasonally loss-making Shell Direct UK
business, which was acquired in October 2004, DCC's adjusted earnings per share
for the first half of the year is expected to decline by approximately 10%.
Outlook
The Board expects that the Group will resume double-digit earnings growth in the
seasonally more important second half of the current financial year.
For reference:
Jim Flavin, Chief Executive / Deputy Chairman
Fergal O'Dwyer, Chief Financial Officer
Donal Murphy, Managing Director - IT Distribution
Kieran Conlon, Investor Relations Manager
Tel.: +353 1 2799 400
Email: investorrelations@dcc.ie
Web: www.dcc.ie
For Editors:
DCC is a sales, marketing and business support services group focused on the
energy, IT, healthcare, food & beverage and environmental markets, operating
principally in Britain and Ireland. In its latest financial year to 31 March
2005, DCC had sales of €2.7 billion and operating profits of €131.5 million.
DCC's shares are traded on the Irish and London Stock Exchanges.
For further information please visit www.dcc.ie.
This information is provided by RNS
The company news service from the London Stock Exchange
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