DCC’s SHARE price fell sharply after the industrial group warned that the mild winter was likely to leave profits trailing expectations by as much as 17 per cent at €175 million.
DCC’s home-heating oil division is the largest of its five businesses. It benefited from the freezing weather which struck its main European markets over the last two winters, helping to lift operating profits to €137 million in 2011.
However, the milder weather enjoyed by northern Europe so far this winter is having the opposite effect and is likely to leave DCC’s energy division, made up largely of heating oil, languishing between €75 million and €90 million.
In a trading statement issued yesterday, DCC warned that group operating profits for its current financial year were likely to be in the region of €175 million to €190 million, between 10 per cent and 17 per cent short of the €212 million it originally predicted.
It would also be between 15 per cent and 25 per cent less than the €230 million in operating profits that the group reported at the end of its 2011 financial year in March.
The news sparked a sharp fall in DCC’s share price in Dublin yesterday. Its stock closed 1.4 per cent below its opening quote at €18.15.
High oil prices have aggravated the problem of falling demand in its key markets. On average, crude oil prices were 27 per cent higher in the final three months of 2011 than during the same period in 2010.
The group’s financial year runs from April 1st to March 31st. Its statement yesterday noted that the three months to the end of December was an important trading period for DCC, when its energy and distribution businesses were at their busiest.
The group said it was encouraged by developments such as its recently announced €23 million deal to buy rival Swea Energi in Sweden. Profits in its electronics and home entertainment distribution business, DCC Sercom, were well ahead of last year, DCC said.
At the same time, its environmental, healthcare and food and drinks divisions were trading in line with expectations.
