DCC plc (LON:DCC), the leading international sales, marketing and support services group, has issued this Interim Management Statement in advance of the Company’s AGM to be held in Dublin at 11.00 am today.
First quarter ended 30 June 2020
Since DCC’s last trading update on 19 May 2020, which covered the first six weeks of the year ending 31 March 2021, the trading performance of the Group has continued to improve in the seasonally less significant first quarter. Trading for the first quarter was resilient and ahead of the Group’s expectations at the time of the last update, although behind the prior year due to the severe lockdown restrictions in place during April and May.
Operating profit in DCC LPG was behind the prior year due to weakness in commercial and industrial volumes, particularly in Britain and Ireland. Notwithstanding a relatively warmer start to the year, the increase in time spent at home by consumers meant domestic and retail cylinder demand was strong during the quarter across most of DCC LPG’s markets.
DCC Retail & Oil performed well in the quarter, driven by good performances from both the British and Danish businesses. The good performances reflected strong demand from agricultural customers and very strong demand in the domestic sector, where customers sought to secure supply during the uncertain lockdown period. Although overall volumes for the quarter were well behind the prior year due to the reduced demand for transport fuels, the positive mix impact of the strong domestic and agricultural performance, the gradual recovery in transport fuels volumes through the second half of the quarter and a good cost performance delivered operating profit modestly ahead of the prior year.
Operating profit in DCC Technology was behind the prior year, although trading improved steadily through the quarter. The business benefited from good underlying demand for consumer technology products in the e-tail and non-traditional retail channels. B2B demand has been impacted more significantly, in particular for products dependent on resellers or integrators accessing business premises.
DCC Healthcare performed strongly during the quarter, with operating profit well ahead of the prior year. DCC Health & Beauty Solutions saw strong demand for nutritional products and benefited from the first-time contribution from the prior year acquisitions in the US of Ion Labs and Amerilab. DCC Vital experienced very strong demand for Covid-19 related products, which offset the impact of substantially lower routine hospital procedures and in-person consultations.
Outlook
Whilst the sustained uncertain environment created by the pandemic continues to impact all economies, DCC has a diverse and very resilient business model as demonstrated during the quarter, leading market positions and an extremely strong balance sheet. The Group is well positioned to continue its growth and development into the future.
Commenting on the performance, Donal Murphy, Chief Executive, said:
“The global measures being taken to mitigate the impact of the pandemic continue to have a significant impact on our employees, customers and business operations. All DCC business units have operated effectively during the quarter, ensuring our customers continue to receive the range of essential products and services we provide. Our number one priority remains keeping our employees safe and well and I am especially proud of all our people who continue to work tirelessly through these exceptional times.
Although a seasonally quieter period for the Group, I have been pleased with the performance of each of DCC’s divisions during the quarter. The trading performance of the Group has been very resilient, considering the significant challenges presented by the necessary restrictions. The improving performance through the quarter has meant we have recommenced selective organic development capital expenditure to ensure we are in a position to capture any opportunity for market share gains during this period.
DCC’s diverse, resilient business model and financial strength ensures the Group is in a very strong position to navigate through the ongoing uncertainty. DCC remains active from an acquisitive development perspective and the Group continues to have the platforms, opportunities and capability for further development across each of our four divisions.”
Management succession
As previously announced, Fergal O’Dwyer, Chief Financial Officer, will retire from DCC and from the Board following today’s AGM. Kevin Lucey will join the Board and succeed Fergal as Chief Financial Officer at the conclusion of the AGM.
Date for Interim Results
DCC expects to announce its interim results for the six months ending 30 September 2020 on Tuesday 10 November 2020.
