DCC Technology – which operates mainly under the Exertis brand – has reported a drop in constant-currency revenue of around 9% for the first half of its financial year.
In the six months to 30 September 2023, the business generated sales of £2.29 billion, a year-on-year decline of 9.1%. It blamed the decrease on an expected fall in demand for consumer technology products.
Operating profit for the period was £38.7 million (most of which came from North America) versus £45.5 million last year. Operating margin fell by just ten basis points to 1.7% following a range of cost-reduction measures.
Below, is DCC’s commentary for each of Exertis’ reporting divisions:
In Pro Tech, DCC Technology is the leading specialist distributor of AV products globally, with a particularly strong presence in North America. The Pro Tech segment delivered a good performance in the first half, driven by strong growth in professional audio in North America. The strong performance in this higher-margin specialist category was beneficial to the division’s margin mix.
Demand for AV products was robust. After a strong performance in the prior year, we maintained our market share in North America. In Europe, we experienced mixed levels of demand across the region. There was reasonable demand for AV and related products, but weaker demand for enterprise level products.
Our Info Tech business distributes high-volume consumer and business IT products to the retail and reseller channels in Europe, with a particularly strong presence in the UK, Ireland and the Nordics. Despite the weak market and related revenue decline, our business in the UK continued to recover strongly in the first half of the year. Operational improvements contributed to a better gross margin and cost performance. We are continuing to focus on these improvements, including the consolidation of a secondary warehouse facility into one national location in the north of England. The business in Ireland continued to perform well and in line with expectations in the first half of the year.
Across the rest of our European Info Tech markets, which have a largely consumer focus, our Nordic business performed robustly. We experienced weaker demand in France and Benelux, where operating profit declined.
In Life Tech, we distribute consumer appliances and lifestyle technology products to the retail and e-tail channels in North America. During the first half of the year, performance in Life Tech declined as a result of weaker demand for consumer electronics, music products, appliances and increased discounting in certain overstocked segments. We increased our investment in digital marketing and this resulted in improved product visibility and market share on key e-tail platforms.