Distribution group DCC hopes to make its first IT acquisition in continental Europe in the "not too distant future", its chief executive Mr Jim Flavin has stated. Mr Flavin would not elaborate on DCC's plans to expand into Europe, but industry sources believe that this first foray is likely to be of a modest scale and be part of DCC's strategy of small bolt-on acquisitions.

DCC's IT distribution operations are currently centred on its Micro P and Gem Distribution operations in the UK and on Sharptext in Ireland. These operations performed strongly in the half-year to the end of September, with operating profits up over 35 per cent to €8.6 million and sales up 31 per cent to €203.4 million.

Overall, in the first half DCC increased its pre-tax profits by just over 19 per cent to €27 million, but profit growth lagged behind the 36 per cent increase in sales to €636.1 million. This fall in margins is largely down to a sharp fall in the margin generated from its energy division, where an increase in oil and LPG prices and a greater level of turnover from the lower-margin oil distribution business saw operating margins fall from 6 per cent to 3.3 per cent.

Turnover from the energy division nearly doubled from €74.4 million to €139.6 million, largely due to the first-time inclusion of the Burmah oil distribution business. LPG volumes were in line with the previous year but margins fell, with DCC unable to recover fully the the cost of propane and butane in the period. However, current selling prices now reflect prevailing LPG product costs, Mr Flavin said.

DCC's two other divisions also performed well, with operating profits in the healthcare division up 73 per cent to €7.6 million and margins up from 8.7 per cent to 9.9 per cent. Margins also improved in the food distribution operations, with operating profits up almost 24 per cent to €7.9 million and sales up 15.5 per cent to €172.7 million.

DCC recently established a supply chain management service for the computer and information technology industry. Startup costs involving investment in personnel and IT produced a loss for the half-year of €1.4 million.