DCC increases profit forecasts after overseas boost
DCC yesterday joined a growing list of Irish companies to hike profit forecasts as recovering markets overseas boost profits and sales.
The company surprised markets yesterday by reporting stronger-than-expected demand following the cold weather which boosted demand for heating oil.
The new forecast pushed shares higher and led to a slew of upgrades from analysts.
DCC's new forecasts came just a day after Ryanair told investors that full-year profit would be at the high end of analysts' expectations due to growth in new markets in Continental Europe.
Last month, Dublin-based CPL made optimistic noises about the recruitment market here, while Kilkenny-based Glanbia said profit may increase as much as 8pc this year as economies strengthen and demand for dairy products improves.
While DCC makes 70pc of profit in UK, the conglomerate, which distributes everything from KP nuts and computer games to heating oil and Bollinger champagne, gives some indication of how the Irish economy is performing. Like DCC, economists have rushed to revise their forecasts for growth upwards in recent months, with many predicting a return to growth in the last quarter of this year.
However, the picture remains cloudy with data from purchasing managers published this week suggesting demand is still weak and contracting due, in part, to the cold snap.
That same cold snap was good news for DCC which reported yesterday that January was "excellent" as freezing weather boosted the company's energy unit. The information technology division also had a "good" performance.
Operating profit at the group's three other units rose during the quarter with "strong" recoveries at the healthcare and environmental divisions.
"DCC has issued an upbeat interim management statement," said analyst David Jennings at Davy stockbrokers. DCC was raised to "buy" from "accumulate" by NCB Stockbrokers analyst Tommy Conway.
Excluding the impact of currency fluctuations, DCC expects annual operating profit to rise between 5pc and 10pc.
Chief executive Tommy Breen said yesterday the company was continuing to look for acquisitions in the UK and continental Europe. It expanded into Denmark last year.
Shares in DCC rose almost 5pc during trading but pared some of those gains to close the day up 40c, or 2pc, at €20.45.