DCC, the Irish conglomerate seeking to narrow its focus to energy, said it still sees its remaining businesses posting “good operating profit growth” in the financial year to next March, even though its first-quarter earnings were “modestly behind” the same period last year.
The company confirmed in a trading statement ahead of its annual general meeting (AGM) on Thursday that it remains on track to complete a deal to sell its healthcare unit to HealthCo Investment, which is owned by funds run or advised by London-based private equity firm Investindustrial Advisors. This would be for a total enterprise value of £1.05 billion (€1.22 billion) by the end of September.
The deal includes £130 million in deferred payments, payable within two years, leases, taxes owing and other liabilities transferring with the sale.
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.
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DCC is widely expected to sell its technology operations in two transactions as early as next year, following a restructuring of its businesses.
“In the seasonally less significant first quarter of the year, group operating profit on a continuing basis was in line with expectations and modestly behind the prior year,” DCC said in the statement. “Energy traded in line with expectations and modestly below the prior year while DCC Technology traded in line with the prior year.”
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Stockbroker Goodbody said in a note to clients this week that it estimates DCC will end up securing just £633 million (€733.4 million) for its technology division.
The figure is about a fifth less than the £800 million Goodbody analyst Kenneth Rumph had originally expected the business to achieve when DCC said in November that it was examining “strategic options” for it.
It is substantially below estimates of more than £1 billion that some investment houses, including Deutsche Numis, had initially put on the division.
Goodbody’s revised estimate follows a weak set of annual results for the division, revealed in group results in May and mounting concerns about the impact of tariffs and cautious consumers on its key US business. DCC also took a series of charges against assets in the division last year in an effort to restructure it and prepare it for sale.
“Our simplification strategy is progressing to plan,” DCC chief executive Donal Murphy said. “Our ambition is to be a global leader in the sales, marketing and distribution of energy products and services, delivering high growth and high returns for our shareholders.”
DCC confirmed that its chief financial officer of five years, Kevin Lucey, will become chief operating officer after the AGM. He will be succeeded in the finance role by Conor Murphy, formerly CFO of the energy unit.
