REG - DCC PLC - Strategy Update: DCC to focus on Energy sector

DCCAnnouncement

12/11/2024 07:00

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RNS Number : 7923L  DCC PLC  12 November 2024

12 November 2024
Strategy update: DCC to focus on Energy sector

DCC is today announcing an update to the Group's strategy, which will simplify
the Group's operations, maximise shareholder value and accelerate the growth
of each of the Group's three divisions.

Summary actions

· DCC believes that its energy business and related opportunity in energy
transition presents the largest growth opportunity, at strong returns,
available to the Group.

· Reflecting the scale of this opportunity, DCC announces today that it will
focus the Group on the energy sector.

· Consequently, DCC:

-  Has begun preparations for the sale of DCC Healthcare, expected to
complete in 2025; and

-  Will review its strategic options for DCC Technology, following completion
of its value enhancing operational improvement programme, within the next 24
months.

· DCC anticipates that surplus cash arising from the simplification of the
Group will be returned to shareholders, while maintaining a strong,
investment-grade balance sheet.

Today's announcement demonstrates the Board's continued focus on active
capital allocation, delivering value for stakeholders and ensuring that the
Group's strategy maximises the growth opportunities available to each DCC
business.

 

An update on the actions above will be provided to the market when
appropriate.

Donal Murphy, Chief Executive of DCC plc, said today:

"We are announcing decisive actions today to simplify our Group, pursue our
largest growth and returns opportunity and unlock substantial shareholder
value, from positions of strength. This aligns with our philosophy of
disciplined capital allocation.

In the energy sector we are building a unique, multi-energy, sustainable
business focused on supporting our customers with their energy transition. Our
strategy will deliver strong profit growth, high returns and a significant
reduction in our customers carbon emissions.

Our Healthcare and Technology divisions have a long and successful heritage in
DCC. They are high-quality businesses, led by strong, entrepreneurial
management teams. Our actions are designed to ensure that these businesses and
our people have the best opportunity to grow and progress."

Background and actions

In May 2022 DCC updated the strategy for its Energy division, focusing on the
2030 objectives of doubling profits while significantly reducing its
customers' carbon emissions. The two key components of the strategy are to
reduce the carbon intensity of essential liquid fuels and to build leading
electron-based energy management capability. The strategy aligns with the
positive structural trends of secure, affordable, efficient, and lower-carbon
energy usage.

Since 2022, DCC has made excellent progress, delivering strong organic growth
in biofuels and building enhanced capability in new energies, such as on-site
power. DCC's proven M&A approach has accelerated the strategy over the
same period, deploying c.£6501 million of capital at attractive returns.

DCC Energy represents 74%1 of the Group's operating profits and delivers
18.7% return on capital employed, the highest return of the Group's three
divisions. DCC Energy is a business of real scale, with market leading
positions in 12 countries. The business supports the needs of 10 million
customers annually, across commercial, industrial, domestic and transport
energy uses. It has a near 50-year heritage in the off-grid sector, bringing
energy, and the capability to consume it, to customers' sites. The business
has a competitive advantage in solving the transition needs of our customers,
founded on relationships that typically last for more than a decade. The
business has already made significant progress in reducing the carbon
intensity of our customers' energy: In 2024 35%1 of DCC Energy's profits came
from renewable products and services (SRO)2 and 42%  came from lower
carbon2 liquid gas.

Given the growth opportunity and the acceleration of DCC's Energy strategy and
the relative size of the Group's other divisions, the Board today is
announcing the following actions:

· DCC Healthcare - the Healthcare division has grown strongly over the last
decade. It has market-leading positions across both its patient health and
consumer health businesses. Each of these businesses play in attractive end
markets with significant consolidation opportunities. After careful
consideration, the Board believes that a sale of the division has the clear
potential to enhance the focus and success of the business, while unlocking
substantial value for DCC's shareholders. Advisors have been appointed and
preparations for a sale have begun.

·  DCC Technology - the Technology division has also grown strongly over the
last decade and provides products and services across three product areas: Pro
Tech, Life Tech and Info Tech. DCC Technology is a global leader in Pro Tech;
and both Pro Tech and Life Tech have a particularly strong operational
footprint in North America. This footprint is currently being integrated and
once completed (c.18 months) is expected to deliver material financial and
operational improvements. The Info Tech business has operated in a challenging
market in Europe in recent years but has improved its profitability through an
operational improvement programme. Given the potential for further
improvements in profitability, DCC commits to reviewing its strategic options
for DCC Technology within the next 24 months.

 

Note: This announcement contains inside information for the purposes of the UK version of Regulation (EU) No. 596/2014 on Market Abuse.

(1) For, or at, the year ended 31 March 2024

(2) Services, renewables & other (SRO) ≤10kgCO(2)e/GJ. Lower carbon
≤65kgCO(2)e/GJ. Carbon intensity value is from use of product sold.

Contact information
 Investor enquiries:

 Donal Murphy, Chief Executive                                 Tel: +353 1 2799 400
 Kevin Lucey, Chief Financial Officer                          Email: investorrelations@dcc.ie
 Rossa White, Head of Group Investor Relations & Comms
 Media enquiries:
 Sodali & Co (Eavan Gannon/Pete Lambie)                        Tel: +44 20 7250 1446
                                Email: DCCGroup@sodali.com

J.P. Morgan Cazenove is acting as financial adviser on the proposed sale of DCC Healthcare.
 
Presentation: Strategy update and interim results - audio webcast and conference call details

Group management will host a live audio webcast and conference call of the
presentation at 09.00 GMT today. The slides for this presentation can be
downloaded from DCC's website, www.dcc.ie (http://www.dcc.ie) .

The access details are as follows:

Ireland:             +353 (0) 1 691 7842

UK:                    +44 (0) 203 936 2999

International:  +44 (0) 203 936 2999

Passcode:           337425

Webcast link:
https://www.investis-live.com/dcc/67068eabb2cedb000e392a82/hjdtw
(https://eur02.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fdcc%2F67068eabb2cedb000e392a82%2Fhjdtw&data=05%7C02%7Chdaly%40dcc.ie%7C61a8e1797ac74d8d516508dcf82e7932%7C5b7cb417ee004876ab2b81fab4a0c984%7C0%7C0%7C638658125724810920%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=rODqn%2FdHsQ44kM4pWEGPhWwC%2BF7wIhL%2BXvP%2BML8D1Wo%3D&reserved=0)

This report, presentation slides and a replay of the audio will be made
available at www.dcc.ie (http://www.dcc.ie) .

About DCC plc
Invest in what the world needs

DCC is a leading international sales, marketing and support services group. We
provide solutions the world needs across three transformative sectors: energy,
healthcare and technology; where we acquire, improve and grow diverse
businesses. We bring our growth mindset to our businesses in 21 countries
across four continents, empowering our 16,700 employees to create long term
value - for our shareholders, customers, society and the planet.

 

Headquartered in Dublin, DCC plc is listed on the London Stock Exchange and is
a constituent of the FTSE 100. In our financial year ended 31 March 2024, DCC
generated revenues of £19.9 billion and adjusted operating profit
of £682.8 million. DCC has an excellent record, delivering compound annual
growth of 14% in adjusted operating profit and unbroken dividend growth of 13%
while maintaining high returns on capital employed over 30 years as a public
company.

Follow us on LinkedIn (https://www.linkedin.com/company/dcc-plc) .

Forward-looking statements

This announcement contains some forward-looking statements that represent
DCC's expectations for its business, based on current expectations about
future events, which by their nature involve risk and uncertainty. DCC
believes that its expectations and assumptions with respect to these
forward-looking statements are reasonable; however, because they involve risk
and uncertainty as to future circumstances, which are in many cases beyond
DCC's control, actual results or performance may differ materially from those
expressed in or implied by such forward-looking statements.

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