Tuesday 21 May 2019

DCC says US rivals 'lack firepower for acquisitions'

Expansion: DCC took control last month of its first US LPG acquisition, Chicago-based Retail West
Expansion: DCC took control last month of its first US LPG acquisition, Chicago-based Retail West
John Mulligan

John Mulligan

Some of the larger players in the US LPG market are stymied in their ability to acquire businesses in the fragmented industry there because of highly leveraged balance sheets, according to DCC CEO Donal Murphy.

DCC, the FTSE-100 services support giant whose activities span heating oil to electronics distribution, said yesterday that it has made its second acquisition in America's LPG market, buying Pacific Coast Energy in Washington State for an enterprise value of £30m (€34.5m).

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DCC took control last month of its first US LPG acquisition, Chicago-based Retail West, which has a presence in states including Indiana, Kansas and Illinois.

The LPG market in the US is extremely fragmented, with around 30pc of the market controlled by about five or six players, and the rest accounted for by 4,000 small operators.

Speaking to the Irish Independent, Mr Murphy said some of the larger operators have "significant amounts of debt".

"They're not well-positioned to deploy further capital," he said. "There's competition for assets, but it's no different than other markets."

Mr Murphy was speaking as DCC released a strong set of results for its 2019 financial year.

It said its revenue rose 16pc to £15.2bn (€17.5bn), while its adjusted operating profit was 20.1pc higher, at £460.5m (€530.5m).

Its LPG unit is its most profitable, with adjusted operating profit at the division having jumped 20.5pc to £201.8m (€232.4m).

Irish Independent

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