Questions over the future of Exertis as DCC signals break-up

Exertis parent DCC has indicated that it is looking to focus solely on the energy market and break up the business. The firm’s chief executive Donal Murphy outlined plans to significantly change the strategy of the business, which currently has technology, energy and healthcare operations. 

“We are announcing a strategic plan to maximise shareholder value by focusing DCC solely on our compelling opportunity in energy and by simplifying the group’s operations through portfolio actions,” he said. “We are taking decisive action from positions of strength to simplify the group pursue our largest growth and returns opportunity in energy and unlock substantial shareholder value.”

He added it had become clear that a change of strategy was required to maximise shareholder value, hence it will focus on the side of its business that is producing the best returns.

“We believe that our energy business is our most compelling growth opportunity at strong returns, reflecting on the scale of the opportunity and the progress we have made with our ‘Cleaner energy in your power’ strategy, the group will now focus solely on energy,” Murphy said.

The firm revealed that DCC Energy represents 74% of the Group’s operating profits and delivers 18.7% return on capital employed – the highest return of the Group’s three divisions.

The timetable to review the status of the technology business – which includes Exertis – is two years. DCC is already in negotiations to off-load its healthcare business and is expecting it to be off the books next year.

“Within the next 24 months, as we complete our operational improvement programme for the business, we will review the strategic options for DCC Technology,” said Murphy. “We have begun preparations for the sale of DCC healthcare, which we expect to complete in 2025. DCC healthcare is an excellent business with a long-term record of growth.

“Our Healthcare and Technology divisions have a long and successful heritage in DCC. They are high-quality businesses, led by strong, entrepreneurial management teams. Our actions are designed to ensure that these businesses and our people have the best opportunity to grow and progress,” he added.

Murphy indicated that the business was taking these decisions from a position of strength and would remain committed to delivering solid results: “We are committed to maintaining a strong balance sheet and our investment grade credit rating.”

In its most recent interim results, issued in September, DCC Technology performed in line with expectations, with operating profit up 1.1% and organic profits back to 1.4% in the first half of the year.

The business has been expanding, with the firm driving more sales in the US, and the results statement indicated operational improvements had delivered cost improvements and it is expecting more in the next 24 months.

In a statement, Tim Griffin, CEO of Exertis IT, said: “We’re excited by the opportunities that DCC’s strategic update presents. This is a great opportunity for our Technology division as we explore the possibility of new ownership. Our focus remains as ever on delivering for our customers and vendor partners. DCC’s strategic update provides another opportunity for us all to grow and progress, and we’d like to reassure our customers and vendors of our commitment to them, to adding value, to delighting all our partners and enabling their success.”