Monday 23 October 2017

DCC profit alert was as clear as the driven snow

SOMETIMES the markets really are dense. The fate of DCC's shares, when they fell 6.8pc during trading on Monday after the company said warm winter weather would equate to lower profit, is a case in point.

How can this profit warning have been a surprise to DCC's investors and the analysts who follow the company? Do they not have gardens with snowdrops and daffodils pushing through the flower beds? Do they not pay for their own fuel bills or watch the energy prices charged in the rest of Europe?

It is almost alarming that serious investors have been taken unawares by the inevitable reduction in demand for heating oil and bottled gas that follows one of the mildest winters in living memory.

The market's regular surprise at such simple cause and effect makes it difficult to believe that the analytical apparatus exists to chart more complex events.

While the warm weather may be confusing for the country's flowers and wild life as well as DCC shareholders, it has at least saved Finance Minister Michael Noonan from too much flak following his decision to cut the winter fuel allowance.

Perhaps he could now introduce real reform of this outdated allowance and link it to the weather, rather than handing out the same amount of cash year after year regardless of whether there is snow on the pavements or buds on our trees.

Indo Business

Also in Business