DCC expects profits to double by 2030 as it chases net zero emissions

DCC, the fuel distribution-to-technology services group, expects to double its operating profits and lower the proportion of business coming from the sale of fossil fuels by the end of the decade, as it sets off on a journey to cut carbon emissions from its energy business to net zero by 2050.

The Dublin-based, but London-listed group’s adjusted operating profit rose 11.1 per cent to £589.2 million (€695.5 million) in the 12 months to the end of March, it said in a statement on Tuesday.

DCC, which entered the energy sector through the 1977 purchase of Flogas in Ireland, saw its international liquified petroleum gas (LPG) business turn in a 2.8 per cent increase in profit to £237.7 million during the financial year, even as the price of LPG almost doubled.

Profit in its retail and oil division, including unmanned petrol stations across Scandinavia, France, Britain and Ireland, jumped 17 per cent after an unwinding of Covid-19 restrictions.

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Chief executive Donal Murphy unveiled plans on Tuesday to bundle the LPG and retail and oil divisions into a new division, called DCC Energy, as he set a target for the unit's so-called scope three carbon emissions to get to net zero by 2050. This covers all emissions that a company is both directly and indirectly responsible for, including in the supply and consumption of its products.

EV charging

The transition will include, in the medium term, greater use of biofuels, providing customers with solar energy solutions, installing low-energy heat pumps, and increasing the availability of electric vehicle (EV) charging units across its fuel forecourts network.

DCC executives told analysts on a virtual presentation that investment returns on EV charging units it had installed in Norway, the leading European market for electric vehicles adoption to date, were running at more than 20 per cent and that margins in this business were higher than from petrol and diesel sales.

DCC Energy is expected to deliver 2 per cent organic profit growth from its traditional and lower-carbon products, including LPG, over the medium term, while earnings from newer energy technologies and services and renewables is expected to increase by an average of 5 per cent.

The group is in the process of hiring a chief executive for DCC Energy, with Eddie O’Brien, head of retail and oil, set to hold the position on an interim basis, before becoming group strategy and sustainability officer.

Meanwhile, DCC’s technology division saw its operating profit rise 12.8 per cent in the last financial year to £81.7 million, as households continued pandemic-induced spending on consumer electronics and working-from-home technology, and business professional audio and video (AV) equipment sales rebounded.

Last December, the technology unit acquired Almo Corporation, the largest distributor of appliances and consumer electronics in the US, in a deal worth $610 million (€578 million). It was the largest deal ever executed by the Irish company.

DCC’s healthcare unit delivered a 22.9 per cent jump in profits to £100 million last year, two-thirds of which came from organic growth.