DCC energy division drives 21% jump in earnings
Group sees opportunity to grow IT security business following global cyberattack
Outgoing DCC chief executive Tommy Breen said the group would have “another year of profit growth and development”.
DCC, the fuel distribution-to-health services group, sees an opportunity to grow its fledgling information technology security business following last week’s unprecedented global cyberattack, according to executives at the company.
The comments came after the Dublin-based conglomerate reported its operating profit surged by 21 per cent last year to £345 million (€405.2 million) as its largest division, DCC Energy, benefited from European filling station and gas firm deals and sterling weakness following the Brexit referendum.
“While it’s a very unfortunate attack . . . it should drive opportunity for our security division,” Niall Ennis, head of DCC Technology, the group’s smallest unit, on the company’s call with analysts after the results were released.
“It’s somewhere where we have a strong service proposition. There are police forces in the UK where we usually run 24/7 managed security portfolios for them where we monitor these risks and that’s the type of area of the business we’d like to develop.”
The unprecedented ransomware virus – or cyberattack – has affected more than 200,000 institutions in more than 150 countries since Friday. Mr Ennis said DCC’s IT security business grew by 15 per cent last year. A spokesman was not immediately able to provide further financial information on the business.
The overall technology division’s operating profit rose 17 per cent last year to €41.1 million, less than 12 per cent of group earnings.
Meanwhile, DCC revealed that as the head of its key energy division, Donal Murphy, prepares to take over as group chief executive in July, his existing domain will be split into two: liquefied petroleum gas (LPG) and retail and oil. These will be headed up by Henry Cubbon and Eddie O’Brien respectively.
DCC Energy saw its profit jump by 24.3 per cent to £254.9 million, helped by the acquisition in the prior year of French gas firm Butagaz and Esso Retail France. It also benefited from the purchases last year of French natural-gas company Gaz Européen and Dansk Fuels, a retail, aviation and commercial fuels business in Denmark.
FTSE 100-listed DCC committed more than £550 million to acquisitions last year, including the agreed purchase of Esso’s retail network in Norway and deal to buy Shell’s LPG business in Hong Kong and Macau, marking its first foray into the Asian market. It has also agreed to dispose of its environmental division, which treats and recycles hazardous and non-hazardous waste in Ireland and the UK, to UK private equity firm Exponent for an enterprise value of £219 million.
Group earnings benefited last year as the euro advanced by almost 13 per cent against sterling, the currency in which it reports figures. Outgoing chief executive Tommy Breen, who steps down in July after three decades with the group, forecast that the current financial year would see further “profit growth and development”.
“Following a flurry of announcements in the past four months (three large transactions and a new chief executive) today’s results serve to reinforce two of the core underpinnings of the DCC investment thesis – strong cash generation and operational excellence,” said Davy analyst Allan Smylie in a note to clients.