DCC has potential war chest of £400m for acquisitions

London-listed energy-to-smartphones conglomerate DCC, which has reported a surge in its financial performance, has said it could swallow acquisitions of up to £400 million annually without having to tap extra funding.

Speaking to The Irish Times after reporting a 26 per cent rise in operating profit to €88.4 million, chief executive Tommy Breen yesterday reiterated guidance that DCC could "comfortably" do buyouts of £200 million from existing resources. "We could actually manage double that . . . £400 million – the balance sheet would allow us to do that," he said.

The company has been on an acquisitions spree for more than a year. It recently paid Shell about €450 million for French liquid fuels supplier Butagaz. Mr Breen said if another potential acquisition of similar size came up in its ongoing discussions with various oil majors, DCC "absolutely" would be able to pursue it.

When asked if it was prepared to do transformative acquisitions larger than £400 million, Mr Breen said it was not actively seeking out large deals for their own sake. “But if one came along and it ticked all the boxes, then we wouldn’t be afraid to pursue it. We would have to talk to our shareholders at that stage,” he said.

DCC, which also recently acquired a network of unmanned fuel stations from Esso, is in "ongoing conversations" with oil majors looking to dispose of non-core assets, such as liquefied fuel units and consumer-facing businesses.

Mr Breen said DCC was prepared to do deals outside of its European stomping ground, although expanding its global footprint was not an aim in itself. He had earlier told analysts it had “had a peep at a few things” outside Europe but that the proposed deals were not right for it. “It could be six or 12 months or it could be two or three years, but I would be surprised if there were not [global] opportunities for us.”

He later told The Irish Times it was a "natural evolution" to go outside Europe.

DCC has a relatively low net debt of £170 million after the Butagaz deal and the company suggested its spending spree was likely to continue. “At the moment, our investors want to us to reinvest our cash in the business, but that could change.” He said “if cash was piling up”, DCC would consider returning cash to shareholders via, for example, a share buyback as it did a decade ago.

Revenue was down slightly to £5.6 billion in the six months to the end of September, although this was due to lower gross fuel prices rather than a dip in trade. DCC’s shares closed in London up more than 8 per cent.

The company reported strong growth in its energy, healthcare and environmental divisions, although its technology division, which mostly distributes smartphones and tablets for big UK retailers, saw a slide in profits.

He also said he was "slightly amused" by a statement on Monday from the Hogan family that co-owns with DCC the company behind Kylemore cafes, which said the family had offered to buy DCC's 50 per cent stake for €6.5 million. "We already told them it isn't and hasn't been for sale," he said, although he added a rider that it was worth more to DCC than the price offered. The Hogan family is thought likely to make a higher offer.