DCC eyes further acquisitions as it reports strong first-half profit

DCC has not seen any negative impact from Brexit and is continuing to eye up more acquisitions, chief executive Tommy Breen said on Monday as the company reported a strong first half.

Operating profit at the international sales, marketing, distribution and business support services group rose by more than a third in the six months to the end of September, jumping to £117.8 million (€136.7 million), from £88.4 million a year earlier..

Adjusted earnings per share were 31 per cent higher at 92.1 pence, and the company increased its dividend by 12.5 per cent.

DCC, which also announced that its energy division is to French natural gas retail and marketing business Gaz Européen Holdings in a cash deal, said operating profit and adjusted earnings per share for the year would be “significantly ahead” of both market expectations and the previous year’s figures.

"The results reflect the continued execution of DCC's strategy which is all about driving as much organic growth as we can out of the business and reinvesting it back at high rates of return," Mr Breen told The Irish Times.

Major acquisition

The group said it is to buy 97 per cent of the French firm’s share capital, based on an initial enterprise value of €110 million, with the remaining shares acquired based on Gaz Européen’s results for March 2021, 2022 and 2023.

The acquisition must be cleared by competition authorities, but is expected to close early next year.

The deal is DCC Energy’s first major acquisition in natural gas, and the company said it would complement DCC’s Butagaz brand’s position in liquid petroleum gas. Mr Breen said the acquisition was a “major development” for the Butagaz business, which it acquired last year.

"When we bought Butagaz flagged that one of the opportunities from it being such a strong brand in France ,was that we could use it to leverage a natural gas business. We had started to do that organically but acquiring Gaz Europeen has given it a boost. We're very happy with the deal," said Mr Breen.

DCC Healthcare, meanwhile has also agreed to acquire Medisource, a pharmaceutical procurement, sales and marketing business in Ireland, for an initial enterprise value of €32 million.

Mr Breen said the company was continuing to weigh up other deals.

“We are not afraid or ashamed to say that part of what we do is make acquisitions; it has been part of the day job since we went public 22 years ago. We’ve made nearly 250 acquisitions and there’s always a pipeline,” he said.

The latest acquisitions are part of a £181 million spend DCC has committed to.

Mr Breen said the group, which derives half of its profits from the UK, had not experienced any negative impact from Brexit and did not expect to in the short term.

“The nature of our business is that we tend not to trade cross-border. Wherever we operate we tend to buy the products we sell in country and sell them in-county so we’ve seen very little impact from Brexit on our business,” he said.