Bloomberg News

DCC Falls Most in Two Months in Dublin After Cutting Outlook

January 16, 2012

(Updates with analyst comment in third paragraph.)

Jan. 16 (Bloomberg) -- DCC Plc fell the most in more than two months in Dublin trading after cutting its full-year operating profit forecast, as unseasonably warm weather hampered demand for fuel.

DCC declined as much as 6.8 percent and traded 3.6 percent or 67 euros cents lower at 17.73 euros in Dublin at 10:50 a.m. after saying it expected operating profit of between 175 million euros ($222 million) to 190 million euros. That compared with earlier guidance for about 212 million euros.

“This is much lower than our downgraded forecasts,” Conor Harnett, an analyst at Dublin-based securities firm NCB Stockbrokers, who has a buy rating on the company, said in a note today.

While DCC has expanded by buying fuel distributors in Ireland and the U.K., “exceptionally mild” Northern Europe conditions hurt demand, the company said in today’s statement. The average monthly temperature in the U.K., DCC’s largest energy market, for the quarter to Dec. 31, was the warmest on record, the company said.

“Temperatures have so far remained seasonally mild,” since the end of the year, DCC said. “The absence of any sustained cold weather along with the difficult economic background and high oil prices are likely to continue to impact adversely both volumes and margins for energy products.”

DCC said it said anticipates a return to growth in the years through March 2013, without giving details. NCB expects DCC’s operating profit for the year to March 31 to be 184 million euros and 226 million euros in fiscal 2013.

Brent Crude

Volumes at DCC Energy fell 12 percent in the quarter compared with the same period in the previous year, DCC said. Heating-related volumes fell 22 percent, as the average price of Brent crude was 27 percent higher, DCC said.

Crude for February delivery rose as much as 78 cents to $99.48 a barrel in electronic trading on the New York Mercantile Exchange and was at $99.44 at 9:19 a.m. London time

DCC has fallen 23 percent in the past 12 months and 2.9 percent this year, giving the company a market value of 1.5 billion euros. The company plans to release its earnings for the year through March 2012 on May 15.

“Much of the downgrade for the current fiscal year was expected given the mild winter weather,” Caren Crowley at Davy, who has an outperform rating on the company, said in a note. “The earnings’ impact is bad luck rather than poor management. The more cautious outlook for full-year 2013 is a reminder that DCC is not immune to economic cycles.”

--Editors: Dara Doyle, Tim Farrand

To contact the reporters on this story: Finbarr Flynn in Dublin at fflynn3@bloomberg.net;

To contact the editor responsible for this story: Colin Keatinge at ckeatinge@bloomberg.net


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