DCC names new boss as it expands into Asia

DCC is to spend over €140m on buying Shell’s commercial fuel business in Hong Kong and Macau, marking its first expansion in the energy services market outside Europe.

The Dublin-based support services group marked a busy day yesterday by announcing the deal and then following it up by telling the markets it was changing its chief executive and disposing of its environmental services division.

Shell is the market leader in supplying piped liquefied petroleum gas in the two territories; selling to domestic, commercial and industrial customers. DCC has spent around €645m since last May on acquisitions across its energy, healthcare and technology divisions.

The expansion of its energy business has seen the group buy a number of retail petrol station networks, around Europe, from Esso and Shell.

Outgoing chief executive Tommy Breen yesterday hinted at more Asian deals, by saying the latest transaction — which is expected to close before the end of next March — will give DCC “a platform for development in the growing liquefied petroleum gas market in Asia”.

Donal Murphy, the head of DCC’s energy division, will be in charge of the group to oversee that growth phase.

DCC yesterday said Mr Breen will be retiring at the group’s July AGM after nine years as chief executive and 30 years with the business; at which point Mr Murphy will take the helm.

He has been with the group for 19 years and has been appointed chief executive following what management called a comprehensive recruitment process, led by its nomination and governance committee and aided by an executive search firm.

DCC also, yesterday, announced the £219m (€256.5m) sale of its non-core environmental division to private equity firm Exponent. In the year to the end of March 2016, DCC Environmental — which comprises UK recycling businesses William Tracey Group and Wastecycle and the Irish-based Enva waste management firm — generated revenues of £153.5m and operating profits of £15.2m.

“The business has performed strongly in recent years and we expect it to continue to grow and develop under the ownership of Exponent,” Mr Breen said.

The sale of DCC Environmental is expected to gain Irish competition authority approval and complete before the end of June.

DCC will receive cash proceeds of around £170m from the disposal, as 25% of the two UK-based businesses are owned by a long-standing minority partner.

The deal is also likely to give rise to an exceptional profit of around £30m to the group.

The group said that it will continue to focus on its remaining three divisions of energy, healthcare and technology.

DCC also said that since the publication of its last trading update, in February, group performance has been “in line with expectations” and management continues to expect both operating profit and adjusted earnings per share for the year to the end of March to be “significantly ahead of the prior year and in line with current market consensus”.

Davy Stockbrokers, which welcomed the timing of the chief executive switch, said that it is forecasting earnings of £360m for DCC’s just completed financial year and earnings per share of £3.

DCC’s share price was up around 2.3% in London trading yesterday.