Pump up the volume

 

THE FRIDAY INTERVIEW:Ray O'Sullivan, managing director of Great Gas

CORK-BORN Ray O’Sullivan is a gas man but not in a ha-ha, Niall Toibin type of way. O’Sullivan is the managing director of Great Gas, the forecourt retailer owned by listed holding company DCC, and he’s heard all the quips about the brand.

“Look, when you come out with a name like Great Gas you’re doing it to get noticed . . . It’s a little bit quirky,” he says with a smile sitting in the coffee dock of the Royal Marine Hotel in Dún Laoghaire. “It’s a play on the Irish term ‘great gas’ and it’s also the American term for gas. Gerry bought the name from an American website, that’s where it came from. It’s turned out to be a great name.”

The company is, in fact, going great guns at the moment, busily expanding its footprint outside its traditional Munster base. Turnover in the year to the end of March 2010 was just shy of €90 million. This compares with €50 million a year earlier. It is spending about €1 million on new stations and branding.

Great Gas sold about 100 million litres of fuel in 2009 and is budgeting for a 30 per cent increase as it grows its network of service stations and supplies fuel to more independents.

Dublin is a key focus for growth. Great Gas has just unveiled its 50th branded forecourt at Parnell Road near Harold’s Cross – a five-year contract worth €30 million. It’s the company’s third station in the capital and O’Sullivan wants to add 10 more in the next three years.

“Twelve months ago we had no site in Dublin, now we have three,” he says. “The beauty of Dublin is volume. As soon as you open a place you have volume straight away. Sometimes when you open in a rural location, it can take a while for people to get used to it. If you open in Dublin, you have the population straight away.”

The Great Gas model is simple – it sources the fuel and takes care of branding. The franchisees are responsible for the day-to-day running of the forecourts. The company doesn’t buy sites. “We’re very flexible with people,” he says. “If they want a one-year contract, we’ll give them a one-year contract. If they want five years, we’ll give them five years.”

There is never much upside to recession but, in the fuel game, it’s been the re-emergence of sites in Dublin which were previously being snapped up by developers.

“Parnell Road was destined for apartments; it had planning and everything,” O’Sullivan explains in his Cork twang. “But there was no point in going ahead, the [property] market had crashed. The positive of the recession is that these places are not closing and going for property development.”

The downside is “the banks”, he says with a sigh. “What people are saying about the banks is absolutely, 100 per cent true. We look for a bank guarantee – that’s our credit check. But they’re getting increasingly difficult to obtain for people and overdraft facilities are increasingly difficult to get, particularly for a new entrant.”

The recession has also seen the Government raise fuel taxes three times since 2008, including the carbon duty earlier this year. “Look, it’s not a carbon tax; it’s going to the central exchequer. The Government is stuck for money; we’re an easy target.”

Based in a village called Churchtown, just a few miles outside Mallow in Co Cork, Great Gas is the new kid on the block. Set up in 2005, it has grown from one site at Ballyhea in Cork, owned by serial entrepreneur Gerry Murphy, to a 50-strong chain of stations.

It also supplies fuel to 30 other forecourts who don’t use the Great Gas brand.

While Great Gas started to turn a profit in the second half of 2008, O’Sullivan says financing its ambitious expansion programme became an issue. In January 2009, DCC acquired the business and, as O’Sullivan tells it, Great Gas’s “funding problems went away overnight”. “We were growing so fast that funding became an issue,” he explains. “The credit departments in the oil majors are the most important people to us. Conoco-Phillips were looking for more and more security from us all the time.

“We had two options – look for an investor or stay as we were. We needed capital and we needed supply agreements to become a national brand. We couldn’t do it all from Whitegate.”

A sale process was put in train and O’Sullivan says DCC, one high-net worth individual and a large distributor were in the mix.

“The one that ticked all the boxes was DCC. We got access to fuel overnight in Dublin and Galway. And the funding problem disappeared.”

O’Sullivan, who owned 23 per cent of the business, is coy about how much DCC paid, saying it involved an upfront sum and a five-year earnout. “It’s all based on performance; it’s reasonably significant.”

What’s it like now to work for a plc? “Once we produce the figures for them, they’re excellent to work for. The change would be the reporting culture. I mean that in a positive way. They really keep you on your toes. How we report now would be more onerous than it would have been in the past.”

DCC also owns Emo, which delivers home heating oil in the Republic and operates forecourts in Northern Ireland. O’Sullivan says a merger of the two is unlikely. “No, it wouldn’t make sense. We’re strong in retail . . . Emo do the commercial side far better than we can. I’d imagine it will be a two-pronged approach.”

O’Sullivan’s route to the top job in Great Gas has been somewhat circuitous. He grew up with six brothers on a small tillage and beef farm about four miles from Clonakilty, some distance from the smell of petrol fumes.

He spent five years at UCD doing a degree in agriculture but insists he never wanted to run the family farm. “No, not when I got out into the world,” he says. “I suppose I did at one time but it was too small to have made a living from it. You’d have to have a part-time job.”

The farm is now leased out.

After college, O’Sullivan worked in England for two years with Kerry Foods as a van salesman. “Kerry Group takes graduates and throws them in at the bottom and you work your way up from there. But my mother used to send me the cuttings from the press and there was an opportunity for a start-up company in Sandyford, in Dublin with DHM Agrochemicals. They were looking for someone to cover the south of the country.”

O’Sullivan spent 12 years in a sales role with DHM before doing a masters at UCC. He linked up with Great Gas in February 2006, getting a chunk of equity to boot.

Not surprisingly, given he’s from Cork, O’Sullivan is a keen GAA fan, “both hurling and football” he says. “That’s the main passion for my sins.” He doesn’t think the hurlers can beat Kilkenny this year – “they’re awesome” – but says the footballers “might do something”.

“They should have beaten Kerry ,” he laments. “But that might be good for them.”

Looking to the future, O’Sullivan says it’s all about growing the brand. “I really believe we could be one of the major retail brands in 10 years’ time so I’m going to continue to drive towards that as long as I can. If we keep growing as we are, we could have 150 stations by then.”

Will he stay beyond the five-year earnout or take his money and run? “I enjoy it and as long as I continue to enjoy it, I’ll stay at it.

“I get a buzz out of seeing one of our trucks coming against me on the road, you know? Or when I pass a station. It’s a great thrill seeing your brand up there.”

Before we wind up, I ask him what he drives. “A BMW 520 . . . diesel,” he whispers.

And does he always fill up at Great Gas stations? “It gives me a pain in the pit of my stomach if I’ve to put a fiver into another petrol station,” he says, with a twinkle. “I would drive on fumes rather than buy fuel elsewhere. It annoys me if I get caught out.”

ON THE RECORD

Name: Ray 0’Sullivan

Job: Managing director, Great Gas

Age: 41

Status: Married with three children

Lives: Glasheen, Cork city

Hobbies: Sport (especially GAA), swimming and cycling

Something we might expect: “I’m a keen Rebels fan.”

Something that might surprise: “I’m a good cook. My signature dish would be seafood pasta.