According to DCC, higher costs are passed on to customers

Irish sales and marketing giant DCC ‘must’ pass on costs to customers as energy prices soar amid new Russia sanctions.

Chief Executive Donal Murphy said further sanctions mean energy price volatility will continue.

The EU is still wrestling over when to impose a phased ban on Russian oil imports, with Hungary blocking a deal until it receives more compensation.

“There must be more sanctions against Russia the longer this war goes on,” Murphy said.

“Of course, if national economies do not have access to energy, that will be a major challenge. It’s just an uncertain environment that’s driving price volatility and it’s hard to see that abating in the near term.”

The boss of the Dublin-based group, which operates in the energy, health and technology sectors, said it will manage or “hedge” contracts and prices with its energy customers to protect them as much as possible from price increases.

“We have to weather commodity price hikes,” Murphy said. “We really want to protect our customers from a lot of fluctuations, especially in the winter months.”

DCC supplies Liquefied Petroleum Gas (LPG) in Ireland under the FloGas brand and sells oil here under the Emo brand. The energy business operates across Europe and entered the US LPG market in 2018.

Yesterday, the company announced it will be merging its LPG, retail and oil businesses into a single entity, DCC Energy, after releasing upbeat financial results for the year ending March 2022.

Average costs in the LPG business have nearly doubled over the year, although that hasn’t stopped operating profits in that part of the business from growing 2.8 percent (6.7 percent on a constant currency basis) to 237 in 2021 £.7m to grow.

The group’s operating profit rose 11.1 percent (15.1 percent at constant exchange rates) for the year to the end of March to £589.2 million (€698.2 million), beating market expectations.

This enabled a 10 percent increase in dividends for the year, marking DCC’s 28th straight year of dividend growth. Adjusted earnings per share rose 11.2 percent over the year.

Profit growth was strongest in DCC’s healthcare division (up 22.9 per cent to £100.4 million, or 25.5 per cent at constant currency), as continued demand for personal protective equipment and the return to elective surgeries fueled demand for medical products from boosted DCC.

“Very strong growth” was also seen in DCC’s dietary supplements and skin care businesses.

All other businesses – with the exception of LPG – posted double-digit growth in operating profits, with retail and oil up 17 per cent (20.1 per cent at constant currency) to £169.4 million and technology up 12.8 per cent (19.9 per cent at constant currency). increased to £81.7m.

The upside was partly due to £600m in acquisitions in the year, including US consumer electronics and appliances retailer Almo – DCC’s largest acquisition to date – and German medical device retailer Wörner, bought in April 2021.

Mr Murphy said the group will offer customers “a lot more” renewable products as it sets a net-zero target for its energy business by 2050 “or sooner”.

He said DCC is “well positioned to grow and develop with momentum” despite the volatile geopolitical and economic environment.