Latest news with #DonalMurphy
Business Mayor
17-05-2025
- Business
- Business Mayor
DCC's reward for strategic shift delayed as Trump casts shadow over tech unit sale
Investor excitement late last year about DCC, which distributes everything from urinary catheters to home heating oil, deciding to ditch its conglomerate roots to focus on one sector has proved short-lived. For now, at least. Shares soared almost 20 per cent in London in the weeks after the Irish group announced last November that it was selling off its healthcare unit and looking at 'strategic options' for its technology business, while doubling down on its largest division: energy. They have retraced their steps and are now marginally below where they were hovering when DCC unveiled the biggest strategic shift in its three decades as a listed company. Chief executive Donal Murphy managed last month to strike a deal to sell the healthcare unit – even with global financial markets in turmoil as Donald Trump flip-flopped on tariffs. The business spans selling medical products and devices to doctors and hospitals, to developing nutritional supplements such as vitamin gummies and beauty products for brand owners. But the £1.05 billion (€1.25 billion) value of the deal fell well short of the £1.3 billion to £1.6 billion some analysts had expected. [ DCC 'confident' it will stay in FTSE 100 ] Murphy told The Irish Times this week that delivering on the sale was an achievement in itself. 'The world has clearly turned upside down since November,' he said. 'The greatest concern was that we wouldn't get a deal done.' The plan is to return £800 million of the £950 million cash proceeds from the disposal to investors in stages. But now comes the hard part: offloading the group's technology division. The tech unit, which distributes audiovisual equipment to events companies and consumer tech gadgets, saw its operating profits fall almost 16 per cent in the group's financial year to the end of March, dragged down by weak household demand for tech products. Murphy insisted this week that his team is still on course to deliver a €20 million-€30 million operating profit boost through a series of measures. Still, prettying up the division is proving an expensive business. The group booked a £52 million charge last year against the loss-making French and Iberian arms of its Exertis business, which distributes tech gadgets from home security cameras to wireless keyboards, in order to get it ready for sale. It agreed last month to sell two units for 'a modest consideration', according to its full-year results statement on Tuesday. It also exited small tech distribution businesses in the Middle East and Scandinavia. DCC also took an almost £74 million goodwill impairment hit against its UK info tech business. A profit recovery in the business 'has taken longer than expected', it said, with market conditions 'showing little sings of improving'. Meanwhile, the bulk of £37 million of restructuring costs racked up by DCC last year covered large 'optimisation and integration' projects in its technology division in North America and the UK. But the big question hanging over the North American operation is what tariffs – wherever they finally land – will do to already-muted consumer demand. DCC may have a compelling story to tell on energy, which will carry the group's ambition of doubling earnings to £830 million over eight years to 2030 as it shifts from making most of its money selling fossil fuels to profiting from the green transition. But investors are likely to continue to apply a so-called conglomerate discount to DCC's stock (complex businesses have long been out of favour across equity markets) until the tech unit is offloaded. Trump has made that harder. Datalex remains hooked on Desmond backstop Travel retail software company Datalex has raised €50 million of equity in two deals in the past four years, mainly to repay emergency loans from its largest investor, Dermot Desmond. Datalex's latest annual report, published on Thursday, shows it remains hooked on financial support from the billionaire. Desmond's Tireragh vehicle is prepared to offer a €5 million funding facility to the company, it said, should it not be able to raise additional equity by the end of June, as planned, to finance its new product offerings to airlines. The money would be repayable by the end of September. Shares in Datalex are currently trading at about 34 cent, about 25 per cent below the level of last September's stock sale (where Desmond was the main buyer), making it difficult for the company to go back to the market. Backstops are usually helpful to a company seeking to raise equity. But does a fear among other investors of Datalex becoming beholden to Desmond loans again (he ended up charging 18 per cent interest on the last lot) make it almost self-fulfilling? Cantor Fitzgerald analyst Peter de Lacy was also scathing on Friday, after meeting with Datalex management. 'Unfortunately, the company has no additional information to share on new client wins or potential pipeline additions. 2024 was a barren year for the company with no new clients added to the roster,' he said in a note to clients. Read More SheSays launches manifesto to tackle adland gender pay inequality He's had enough. 'Given the uncertainties around revenue growth and drivers, lack of new client wins and pipeline information and a pending quantum-unknown equity financing, we are dropping coverage of the stock and withdrawing our 32c price target,' he said.
Irish Times
17-05-2025
- Business
- Irish Times
DCC's reward for strategic shift delayed as Trump casts shadow over tech unit sale
Investor excitement late last year about DCC , which distributes everything from urinary catheters to home heating oil, deciding to ditch its conglomerate roots to focus on one sector has proved short-lived. For now, at least. Shares soared almost 20 per cent in London in the weeks after the Irish group announced last November that it was selling off its healthcare unit and looking at 'strategic options' for its technology business, while doubling down on its largest division: energy . They have retraced their steps and are now marginally below where they were hovering when DCC unveiled the biggest strategic shift in its three decades as a listed company. Chief executive Donal Murphy managed last month to strike a deal to sell the healthcare unit – even with global financial markets in turmoil as Donald Trump flip-flopped on tariffs . The business spans selling medical products and devices to doctors and hospitals, to developing nutritional supplements such as vitamin gummies and beauty products for brand owners. READ MORE But the £1.05 billion (€1.25 billion) value of the deal fell well short of the £1.3 billion to £1.6 billion some analysts had expected. [ DCC 'confident' it will stay in FTSE 100 Opens in new window ] Murphy told The Irish Times this week that delivering on the sale was an achievement in itself. 'The world has clearly turned upside down since November,' he said. 'The greatest concern was that we wouldn't get a deal done.' The plan is to return £800 million of the £950 million cash proceeds from the disposal to investors in stages. But now comes the hard part: offloading the group's technology division. The tech unit, which distributes audiovisual equipment to events companies and consumer tech gadgets, saw its operating profits fall almost 16 per cent in the group's financial year to the end of March, dragged down by weak household demand for tech products. Murphy insisted this week that his team is still on course to deliver a €20 million-€30 million operating profit boost through a series of measures. Still, prettying up the division is proving an expensive business. The group booked a £52 million charge last year against the loss-making French and Iberian arms of its Exertis business, which distributes tech gadgets from home security cameras to wireless keyboards, in order to get it ready for sale. It agreed last month to sell two units for 'a modest consideration', according to its full-year results statement on Tuesday. It also exited small tech distribution businesses in the Middle East and Scandinavia. DCC also took an almost £74 million goodwill impairment hit against its UK info tech business. A profit recovery in the business 'has taken longer than expected', it said, with market conditions 'showing little sings of improving'. Meanwhile, the bulk of £37 million of restructuring costs racked up by DCC last year covered large 'optimisation and integration' projects in its technology division in North America and the UK. But the big question hanging over the North American operation is what tariffs – wherever they finally land – will do to already-muted consumer demand. DCC may have a compelling story to tell on energy, which will carry the group's ambition of doubling earnings to £830 million over eight years to 2030 as it shifts from making most of its money selling fossil fuels to profiting from the green transition. But investors are likely to continue to apply a so-called conglomerate discount to DCC's stock (complex businesses have long been out of favour across equity markets) until the tech unit is offloaded. Trump has made that harder. Datalex remains hooked on Desmond backstop Travel retail software company Datalex has raised €50 million of equity in two deals in the past four years, mainly to repay emergency loans from its largest investor, Dermot Desmond . Datalex's latest annual report, published on Thursday , shows it remains hooked on financial support from the billionaire. Desmond's Tireragh vehicle is prepared to offer a €5 million funding facility to the company, it said, should it not be able to raise additional equity by the end of June, as planned, to finance its new product offerings to airlines. The money would be repayable by the end of September. Shares in Datalex are currently trading at about 34 cent, about 25 per cent below the level of last September's stock sale (where Desmond was the main buyer), making it difficult for the company to go back to the market. Backstops are usually helpful to a company seeking to raise equity. But does a fear among other investors of Datalex becoming beholden to Desmond loans again (he ended up charging 18 per cent interest on the last lot) make it almost self-fulfilling? Cantor Fitzgerald analyst Peter de Lacy was also scathing on Friday, after meeting with Datalex management. 'Unfortunately, the company has no additional information to share on new client wins or potential pipeline additions. 2024 was a barren year for the company with no new clients added to the roster,' he said in a note to clients. He's had enough. 'Given the uncertainties around revenue growth and drivers, lack of new client wins and pipeline information and a pending quantum-unknown equity financing, we are dropping coverage of the stock and withdrawing our 32c price target,' he said.
Daily Mail
13-05-2025
- Business
- Daily Mail
DCC to hand investors £800m from sale of healthcare arm
DCC plans to return £800million to shareholders following the disposal of its healthcare division. The support services business last month agreed to offload its healthcare arm for £1.1billion to HealthCo Investment, a subsidiary of European private equity group Investindustrial Advisors. Although DCC expects to complete the deal in the third quarter of 2025, it intends to soon start a £100million share buyback scheme as part of the divestment process. Another £600million will be handed out once the disposal is finalised, while another £100million will be delivered after DCC receives a deferred payment of £130million within two years. DCC made the announcement alongside results showing its pre-tax profits slumped by 17.9 per cent to £294.9million in the year ending March. Adjusted operating profits in its technology segment plummeted by 15.7 per cent to £82million due to weak demand for consumer tech products across the UK and Europe in its information tech operations. However, they rose by 6.5 per cent to £535.5million in the group's energy business despite lower average commodity prices dragging DCC's overall turnover down by 4.5 per cent to £18billion. DCC Energy benefited from strong organic growth and takeovers, including Irish vehicle telematics provider Cubo and solar energy companies Wirsol and Acteam ENR. Donal Murphy, chief executive of DCC, said: 'We are pleased to report that we delivered another year of good growth, while making strategic progress to simplify the group to focus on our opportunity in energy. 'Our sale of DCC Healthcare enables a material return of capital to shareholders. We will focus our efforts on energy, our largest and highest-returning business.' Founded as Development Capital Corporation in 1976, DCC announced plans last November to break up the business to focus on the energy sector. Among the services provided by the company's energy division are liquid gas and fuel distribution, solar panel installation, and retail forecourts. Russ Mould, investment director at AJ Bell, said: 'DCC's future is in the energy sector, and it's fortunate that part of its business was the strongest. 'In a way, it justifies the decision to slim down. 'The problem child was the technology division, which is a concern given that DCC is on a mission to improve performance before selling the business. It needs to work fast to whip the tech arm into shape.' DCC shares were 4.5 per cent down at £48.44 on late Tuesday morning, making them the FTSE 100's biggest faller.
Irish Examiner
13-05-2025
- Business
- Irish Examiner
Support services firm DCC sees profit of its remaining divisions increase by nearly 3%
DCC, the Dublin-headquartered support services firm, saw an 2.9% increase in adjusted operating profit during its most recent financial year driven by growth in its energy division. The firm is made up of three divisions; energy, technology, and healthcare but in April it announced the sale of its healthcare division in a deal worth just over £1bn. The deal is subject to regulatory approvals and is expected to complete in the third quarter of this calendar year. The company's preliminary results for the financial year ending on March 31, 2025 account for this sale. According to the company's results, its two remaining divisions generated adjusted operating profit of £617.5m (€726.7m) , an increase of 2.9% year-on-year. Operating profit from its discontinued operations - DCC Healthcare - stood at £86.1m. Profit in its energy division increased by 6.5% to £535.5m while profit in its technology division declined by 15.7% to £82m. Group revenue decreased by 4.5% to £18bn due to lower revenue in DCC Energy where average commodity prices were lower. Donal Murphy, chief executive of DCC, said they are pleased to report another year of 'good growth' while making 'strategic progress to simplify the group to focus on our opportunity in energy'. 'Our sale of DCC Healthcare enables a material return of capital to shareholders. We will focus our efforts on Energy, our largest and highest-returning business. We are energised about the future,' he said. The company said it intends to return up to £800m of DCC Healthcare divestment proceeds to shareholders, commencing shortly with a £100m share buyback programme. The company said it expects to see good operating profit growth during this current financial year.
Irish Times
13-05-2025
- Business
- Irish Times
DCC to return €950m to shareholders after sale of healthcare division
DCC, the energy to technology distribution and services group, said it plans to return £800 million (€950 million) to shareholders after agreeing last month to sell its healthcare division. The group also reported on Tuesday that its operating profit rose 4.9 per cent to £703.6 million in its financial year to the end of March, driven by its energy group. It continued to prepare its technology arm for sale, by appointing a new head of its North American unit, exiting some loss-making businesses, and focusing on operational and capital efficiency. DCC said it expects the current financial year to be one of 'good operating profit growth on a continuing basis, strategic progress and continued development activity'. Still, the operating profit in its technology division fell by 15.7 per cent to £82 million. READ MORE 'We are pleased to report that we delivered another year of good growth, while making strategic progress to simplify the group to focus on our opportunity in energy,' said chief executive Donal Murphy. 'Our sale of DCC Healthcare enables a material return of capital to shareholders. We will focus our efforts on energy, our largest and highest‐returning business. We are energised about the future." DCC, founded in 1976 by businessman Jim Flavin as a provider of venture capital for start-ups before floating almost two decades later, revealed in November it was abandoning its conglomerate roots with a plan to sell its healthcare division and review 'strategic options' for its technology business, in order to focus on its energy unit. The Dublin-based but London-listed company promised at the time to return cash generated by asset sales to shareholders DCC agreed last month to sell its healthcare unit to HealthCo Investment, which is owned by funds run or advised by London-based private equity firm Investindustrial Advisors. The planned deal is on a cash-free, debt-free basis and is subject to various regulatory approvals. It will involve a cash consideration of £945 million, with £130 million deferred for payment within two years. Leases, taxes owing and other liabilities transferring with the healthcare unit bring the total enterprise value of the transaction to £1.05 billion. It plans to start a £100 million share buyback programme shortly and follow up with a £600 million repurchase programme once the healthcare deal is completed. A final £100 million will be paid after the deferred payment is handed over. DCC's energy division posted a 6.5 per cent increase in operating profits last year to £535.5 million. Most of its profits have been coming from the sale of fossil fuels, including oil and gas sold for household heating and fuel pumped through about 1,175 petrol stations across Scandinavia, France, Britain and Ireland. However, Mr Murphy's team has invested heavily in recent years – mainly through acquisitions – in products and services to help businesses and households make the green transition. These include solar panel and heat pump installation businesses. The company now has pumps offering low-carbon renewable diesel (hydrotreated vegetable oil, or HVO) in fuel service stations across Europe as well as an expanding network of electric vehicle (EV) charging points.
