DCC’s chief executive, Donal Murphy, said he’s “very confident” the group will hold on to its position as the only Irish company on the FTSE 100 as it focuses on growing its energy business after abandoning its conglomerate roots.
The Dublin-based group said on Tuesday it plans to to return £800 million (€950 million) to shareholders after agreeing last month to sell its healthcare division. A sale of its technology division is also likely as soon as next year, after management complete a programme to reboot that business’s earnings.
Speaking to The Irish Times, Mr Murphy highlighted the fragmented European and North American liquefied natural gas (LNG) and European solar panels industries as key energy-transition areas it would like to play a role in continuing to consolidate.
“We see a huge opportunity in energy,” said Mr Murphy. “I think there’s a long way to go to the bottom end of the FTSE 100. I’d be very confident we’ll remain in it. We’re a premiership team. We want to remain in the premiership.”
DCC is the only Irish plc on London’s keenly-followed FTSE 100 index, following the exits of CRH, Smurfit Kappa (now Smurfit Westrock) and Flutter Entertainment as each moved its main listing to New York in recent years. DCC’s current market value is almost £5 billion, while the smallest companies on the FTSE 100 have a market capitalisation of about £3.8 billion.
DCC reported on Tuesday that its operating profit rose 4.9 per cent to £703.6 million in its financial year to the end of March, driven by energy. The group plans to increase its dividend by 5 per cent, marking 31 straight years of growth as a listed company. It expects the current financial year to be one of “good operating profit growth on a continuing basis, strategic progress and continued development activity”.
Founded in 1976 by businessman Jim Flavin as a provider of venture capital for start-ups before floating almost two decades later, DCC revealed in November it was ditching its conglomerate roots with a plan to sell its healthcare division and review “strategic options” for its technology business, in order to focus on its energy unit.
The company promised that the time to return cash generated by asset sales to shareholders.
DCC agreed last month to sell its healthcare unit to HealthCo Investment, which is owned by funds run or advised by London-based private equity firm Investindustrial Advisors for £945 million in cash, with £130 million deferred for payment within two years. Leases, taxes owing and other liabilities transferring with the healthcare unit bring the total enterprise value of the transaction to £1.05 billion.
It plans to start a £100 million share buyback programme shortly and follow up with a £600 million repurchase programme once the healthcare deal is completed. A final £100 million will be paid after the deferred payment is handed over.
DCC’s energy division posted a 6.5 per cent increase in operating profits last year to £535.5 million.
Most of its profits have been coming from the sale of fossil fuels, including oil and gas sold for household heating and fuel pumped through about 1,175 petrol stations across Scandinavia, France, Britain and Ireland. Mr Murphy indicated DCC plans to be a big consolidator of the North American and US LNG sector, where, he said, it currently has a 5 per cent share of the addressable market.
However, Mr Murphy’s team has invested heavily in recent years – mainly through acquisitions – in products and services to help businesses and households make the green transition. These include solar panel and heat pump installation businesses.
DCC plans a strategic review of its technology division after a programme to turn around the profits of a unit that has been affected by weak consumer demand for tech gadgets in recent times. Operating profit in the division fell by 15.7 per cent to £82 million last year. Mr Murphy said the unit is still on course to deliver €20 million-€30 million of operating improvement, even as its key North American business is affected by tariffs and cautious consumers.
