Industrial holding group DCC said yesterday the profit contribution from associate company Manor Park Homebuilders will be "materially better" this year than had been expected.
A Manor Park transaction which yielded a significant profit has fallen within the 2006 financial year, and not within the 2007 year as had been expected, the company said.
The profit contribution from Manor Park in 2007 would, therefore, be reduced, said the group. In addition, planning issues which delayed commencement of certain planned housing developments, meant profits from those developments would be deferred to 2008, DCC said.
While earnings per share for 2006 would be above market expectations, earnings for 2007 "may be approximately 5 per cent below market expectation", the company said in a trading update.
The DCC share price fell by less than 1 per cent, yesterday, to €19.02. DCC chief executive Jim Flavin said the transaction which had been finalised last Friday was "an everyday piece of business" involving "a small parcel of land". He did not want to comment further as it was not strictly a DCC matter. The Manor Park transaction, which generated the significant profit, was completed on Friday, March 31st, the last day of DCC's financial year.
Manor Park is an associate company of DCC, which holds a 45 per cent stake in it.
In its statement, DCC said it "expects to report group operating profit, before contribution from associates, for the year to March 31st, 2006, in line with market expectation. Arising from the higher than expected profit contribution to DCC from its associate company Manor Park, in the year to March 31st, 2006, DCC expects to report early double digit growth in its adjusted earnings per share for the year to March 31st, 2006, which is ahead of expectations.
"Based on DCC's current estimate of the profit contribution to DCC from Manor Park in the year to March 31st, 2007, DCC's adjusted earnings per share for the year to March 31st, 2007, may be approximately 5 per cent below market expectation."
Mr Flavin said the value of DCC's investment in Manor Park has significantly increased over the past year.
"Manor Park has a large landbank for housing development and other projects in the pipeline from which it should earn substantial profits in the future."
He would not comment on media reports that DCC is interested in acquiring the Statoil business in Ireland in partnership with Musgrave.
