DCC admits its DCC Technology arm endured tough trading conditions last year but says cost-cutting measures will restore growth in fiscal 2017
Distribution powerhouse Exertis endured a "very difficult year", parent company DCC Group said as it unveiled its annual results, adding that it is confident recent cost-cutting actions will restore the distributor to growth.
While showering praise on its Energy, Healthcare and Environmental division, newly crowned FTSE 100 firm DCC Group admitted its DCC Technology arm had endured tougher times in the 12 months to 31 March 2016.
Operating profit at DCC Technology - which trades as Exertis - fell 28.8 per cent to £35.1m, with operating margin sliding from 2.1 to 1.4 per cent.
Boosted by a couple of recent acquisitions, including Apple distributor Computers Unlimited, DCC Technology's revenues rose 3.9 per cent to £2.44bn.
"Challenging trading conditions" experienced in the UK, which generated 72 per cent of DCC Technology's sales, more than offset better performances elsewhere, including in the Nordics and Benelux, which saw "strong organic growth", DCC said.
As already reported, UK sales were hit badly by a reduction in sales of products from one large supplier and weaker demand for tablets, smartphones and gaming products. Like for like UK sales fell seven per cent.
"In response to the challenging trading conditions in the UK, the business has reduced its cost base and is continuing to build its market position in new and developing product categories such as smart technology, audio visual, network security and virtual reality," DCC said.
The construction of a new 450,000 sq ft UK distribution centre in the north of England is "progressing well", with a phased relocation to the new facility set to take place in DCC's fiscal second-half beginning in October, the firm added.
DCC said DCC Technology is focused on broadening its activities in the coming year, both from a product and customer perspective.
"The business is confident that the business development and cost efficiency initiatives undertaken will bring about a return to growth in the coming year," it said.
