‘If you invested £100,000 30 years ago in DCC when we floated, you’d have £6.4 million in your back pocket today,’ says chief executive Donal Murphy, the Irish distribution and services conglomerate that sells everything from catheters to hospitals to audiovisual equipment to events companies, has never been a simple stock to explain in its three decades as a listed company.
DCC may have simplified its investment case over the past decade by selling its food and beverage businesses and recycling and waste management operations. Last year, for example, the company installed solar panels capable of generating 150 megawatts of power, mainly for commercial and industrial customers. It announced on Tuesday that it is pushing further into the domestic market by acquiring UK-based Next Energy, an installer of solar panels, heat pumps and insulation for older British homes, for an enterprise value of £90 million.
It’s more profitable business, too. DCC executives highlighted on a call with analysts this week that the operating profit margins on HVO and electricity pumped through EV chargers are higher than what it gets from selling petrol or diesel. Margins in SRO range from 10-15 per cent for solar panel installations to “30 per cent plus on energy management services” for commercial clients, they said.
The company said this week it is generating a healthy return on capital employed rate of 15 per cent on so-called SRO acquisitions carried out in recent times. They compare to an 18.7 per cent rate for the wider energy unit.
Source: Loan Digest (loandigest.net)
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