DCC chief says lagging units have passed the 'acid test'
DCC chief executive Tommy Breen said he remains committed to smaller operating units which are lagging behind DCC's two biggest divisions in sales and earnings.
Speaking to the Irish Independent as DCC released interim results, Mr Breen said that while the two smallest divisions – environmental and food and beverage – deliver relatively low revenue compared to its energy and technology arms, the primary consideration is the return on capital employed.
"That's the acid test," he said, adding that DCC remains happy with their performance, which will see modest growth in the current year. He said DCC has a strong balance sheet and that as long as the two businesses have reasonable prospects, they will remain part of the group.
In the six months to the end of September, DCC reported an 11.1pc rise in group revenue to £5.42bn (€6.4bn), while operating profit rose 38pc to £69.4m (€82.6m). The increases were driven by its two largest units – energy and IT. Just £448m (€533m) of group revenue and £4.6m (€5.5m) of operating profit was generated in Ireland.
The environment arm generated revenue of £64.9m (€77.2m), up 11.5pc. Food and beverage revenue was up 10.8pc at £107.3m (€127.7m). Operating profits at the two units were £6.3m and £2.9m respectively.
Mr Breen said the company has visibility on orders from retailers for consumer devices for the Christmas selling season, but declined to say whether they were higher than last year's orders. But he said there are signs of an improvement in business confidence in the UK.
He added that DCC, which moved its listing to London this year and is reporting in sterling, remains on the acquisition trail.