January 2017: DCC

Tommy Breen, CEO, DCC Group

A landmark Norwegian acquisition and strong Q3 results make for a strong start to 2017 at DCC.

Sales, marketing, distribution and business support services group DCC organises its activities into four divisions: Energy, Healthcare, Technology and Environmental.

The first of these is on the move already this year, as DCC has announced a £235m deal to buy Esso’s Norwegian petrol station network – the third-largest in the Scandinavian country, with a 20% market share.

The deal encompasses 142 company-operated sites, along with supply contracts for 108 Esso-branded stations – all of which will be integrated into DCC Energy’s infrastructure, which was built up two years ago in the wake of the company’s Esso France deal and is designed to be operated from an operations centre outside Dublin.

According to CEO Tommy Breen, “The acquisition of Esso Retail Norway is another material step for DCC in building its retail petrol station business in Europe. From a modest position three years ago, DCC Energy will, following completion, operate over 1,000 retail petrol stations and is ambitious to continue this development. The acquisition is consistent with our aim to operate world-renowned retail fuel brands and be an excellent partner for oil majors.”

The acquisition of Esso Retail Norway is another material step for DCC in building its retail petrol station business in Europe

The deal is expected to complete in Q4, after which DCC Energy supply about 2,000 dealer-owned stations in addition to its own 1,000 facilities. “DCC Energy’s strategy is to be a global leader in the sales and marketing of fuels and related products and provision of services to end consumers,” the company explained further. “DCC Energy has a strong market presence in the LPG, retail and fuelcard, and oil markets and is well positioned to continue to grow its business organically and through acquisition.

“The acquisition of Esso Retail Norway is in line with this strategy and DCC Energy’s ambition to build a substantial European retail petrol station business, leveraging its low-cost operating infrastructure and, where required, partnering with leading retail operators to manage a convenience retail offering.” Substantially asset-backed, the deal is expected to bring in a 15% return in the first year of ownership.

STRONG YEAR

DCC’s ability to bring in a quarter-of-a-billion pound sterling deal has, no doubt, been boosted by strong results. The company’s Q3 2016 figures saw the group record an operating profit that was “strongly ahead of the prior year and in line with expectations”, it revealed in its interim management statement.

In recent months the LSE-listed FTSE 100 group completed the acquisitions of Hammer, Medisource and Gaz Europeén: in what it calls “another active development period for DCC”, it has earmarked around £430m for acquisitions.

The group’s last full-year results, for the year ended March 31st, saw DCC record an operating profit of £300m on the back of £10.6bn in revenues and a headcount of 10,500 in 15 countries. It expects profit and adjusted EPS to be “significantly ahead of the prior year and in line with current market consensus”.

DCC’s Energy division reported “strong growth”, with DCC Healthcare “in line with expectations and the prior year” despite sterling fluctuations hitting its pharma performance. The acquisition of cabling distribution firm CUC in the previous year helped DCC Technology to grow profits “strongly ahead of the prior year”, and DCC Environmental also grew: all factors that point towards a company growing in confidence too.