Almost time for DCC to bin its ambitions in the waste sector

DCC, the Dublin-headquartered, London-listed conglomerate, is the broadest church in corporate Ireland: there seems to be a little bit of everything in its astoundingly diverse portfolio of assets.

From petrol stations to medical distributors, coffee beans to games consoles, home heating oil and recycling plants, the company is like a microcosm of the UK and Irish economies. But is it finally starting to focus?

This week, the company effectively got out of the food business following weekend reports that it has hired an investment bank to offload the under-performing division.

DCC announced on Tuesday it has agreed to sell two companies representing the bulk of the division – Robert Roberts coffee and Kelkin health foods – to Valeo Foods for £47 million.

The remainder of its food business, a 50 per cent stake in Kylemore cafes and the vestiges of Allied Foods, is apparently still up for grabs.

It had long been rumoured that two of DCC’s five operating divisions might be offloaded. Food was one of them, environmental services the other. This would leave it to concentrate on its largest and most profitable divisions: energy distribution, technology distribution and healthcare distribution.

DCC’s environmental services division comprises waste and recycling businesses in Ireland and, primarily, Britain. It has revenues of £130 million and last year made operating profits of £11.7 million, so it is hardly a drain.

But landfill costs have rocketed in recent years and countless new entrants are trying their luck at the recycling business – waste is now a crowded space.

This is precisely why NTR fled the sector for the greener fields of wind energy.

DCC is primed for growth as the economies on these isles recover and it is hungry for profit-boosting acquisitions, especially in the fuels market.

It would be a much better use of the group’s capital to offload its environmental division and redeploy it elsewhere, sooner rather than later.