Shares in DCC, the business support services group, slumped over 9% in Dublin today after it said that trading has worsened for its IT distribution division. The company said it now expects single digit earnings growth in the current financial year.
'The tough trading conditions experienced in DCC's IT Distribution division since late 2004 further deteriorated in July and August 2005,' a trading statement from the company said.
It said that its UK software distribution business, Gem Distribution, has been especially impacted by the sharp decline in retail consumer expenditure on technology and entertainments products in July and August.
'It is expected that the IT Distribution division's operating profits will decline by about 45% in the first half of the financial year compared with the first half of the prior year,' the company added. The division contributed 21% of the group's operating profit in the last financial year.
DCC said it now expected its adjusted earnings per share for the first half of the year to decline by about 10%. It said this was as a result of difficult trading in the IT sector, along with the budgeted first time impact of the seasonally loss making Shell Direct UK business, which was bought last October.
'The board expects that the group will resume double-digit earnings growth in the seasonally more important second half of the current financial year,' the statement said.
DCC has IT, healthcare, food and beverages, and energy divisions. It shares closed €1.69 lower at €16.70 in Dublin this evening.
