For a company generally considered one of the most cautious in corporate Ireland, it is somewhat ironic that DCC keeps its headquarters in a building associated with the average gambler's favourite sport.
The impressive pile adjacent to Leopardstown Racecourse, which the London-listed, diversified services giant DCC now calls home, was once owned by Horseracing Ireland. The building was revamped by its new occupant two years ago, but the association with its past remains.
The two meetings rooms downstairs, off the airy lobby with its sweeping staircase, are named after a pair of famous Irish racehorses: Galileo and Istabraq. Upstairs in the office of Tommy Breen, its quietly spoken chief executive, is a further nod to the sport: an elegant painting of a chestnut horse.
Breen is familiar with the concept of a flutter. The son of a bookmaker who grew up working in his father’s shops, he says he reads the newspaper racing pages in the mornings before he gets to the business section.
"Just briefly," says the Downpatrick man, cracking a smile.
Breen is courteous and engaged, but he cultivates a cautious, judicious persona. No Gordon Gekko antics here. Though, given the muscular financial performance of the highly profitable DCC in recent years, you would cut him some slack if he was swinging on his office chair, chomping a Cuban and dropping ash all over his chalk-stripe suit.
But that would not be Breen’s way at all. The DCC boss rarely even gives interviews, but there comes a time for everything. It is DCC’s 40th birthday and the company’s most senior figures, past and present, will gather in Dublin this weekend for a celebration.
The group was founded by Jim Flavin in 1976 – and titled eponymously – as a development capital company. It switched its name to the acronym years later, when it pivoted into industrial holdings. Breen, who is only the second boss in DCC's history, has been with the company for 31 years.
Will Flavin, who resigned from DCC eight years ago but remains a significant investor, take part in the celebrations with the company he founded?
“Jim’s a big shareholder,” Breen says. “We’ll have people who were involved – a small number of people – who were part of the story as directors, non-executive directors and so on. And we will involve all those people.”
DCC, with its broad interests ranging from fuels companies such as Emo Oil to healthcare products and the distribution of electronics, is one of the big beasts of the Irish business landscape. Its interests lie mainly in Britain, Ireland and France.
It ditched its Dublin listing in 2013 and broke into the blue-chip FTSE 100 of the London Stock Exchange last December. With a market capitalisation of about £5.67 billion (€7.25 billion), it sits about 71st on the list of the largest companies listed in Britain.
The only other Irish companies on the list are CRH, Paddy Power Betfair and Smurfit Kappa. Shire, a pharmaceuticals plastic Paddy that is here mainly for the corporate tax rate, doesn’t really count when we’re dishing out the green jerseys.
Breen is proud to have led DCC onto the FTSE 100. The international cachet with investors is important, of course, but he also places value on the sense of achievement it has given staff.
“It is good for the people in organisation,” he says. “It’s just a mark of achievement, another box ticked.”
Five in one
DCC sought a London listing to make it more interesting to investors, according to Breen. When it made the move, it was essentially five diverse companies in one: a fuels division, healthcare, IT distribution, environmental and waste management, and a foods distribution company.
It has since sold off most of its food businesses, although it retains a 50 per cent stake in the Kylemore cafe group.
“We’re not an easy story [for analysts],” Breen says. “We realised that if we were part of the FTSE, we would get more coverage. Now we have seven or eight brokers covering us in London.”
DCC has grown strongly in recent years and results announcements have become a cinch for Breen, especially since the recovery accelerated in Britain. In its most recent results, it reported operating profit growth of 35.5 per cent to £300.5 million, the fastest pace of growth in two decades.
The bonanza was driven largely by its energy business and by organic and acquired expansion. It has, for example, retail fuels businesses and unmanned petrol stations around Europe. DCC has become adept at sniffing out downstream assets being sold off by the big oil majors.
The FTSE 100 calling card will only give it more credibility with the big corporates as they sell off more assets to repair their balance sheets. Breen is quick to reiterate, however, that it has kept its own balance sheet largely free of any significant debt.
Last year, DCC bought Butagaz, the French liquefied petroleum gas business, in a £319 million deal. It also snapped up a French Esso network for €122 million. It has concluded deals in Scandinavia and Britain, where it has big hopes for its growing healthcare distribution business.
Outside Europe
Breen thinks it is “inevitable” that DCC will eventually buy a non-European fuels business from one of the oil majors, although he won’t put a timeframe on it. He hints that it may also buy a healthcare business outside Europe.
However, fuels is by far its largest division and most likely to yield a deal to expand its footprint. Are there any far-flung deals that are well down the track?
“We’re not looking at anything specifically . . . ”. Brief pause. “ . . . that I particularly want to talk about at the moment. We don’t have it as a strategic objective that we need to be in a non-European market this year or next year, or whatever. I just think it is inevitable in the evolution of DCC.”
There was a well-flagged slowdown in its Sercom electronics division, which distributes to retailers products such as smartphones and tablets.
“It was clear 12 months ago there would be a slowdown. It has been faster than anticipated. Some of it is market saturation, but the product life cycle has also proved to be longer. But I believe the technology business will be back in growth this year.”
There has been no major breakthroughs in the smartphones market for quite a while, but Breen sees scope for growth in smart electronics products for the home and wearable technology: “There isn’t a critical mass yet, but that will change.”
Head for figures
Breen habitually backs his assertions up with ratios and figures – the hallmark of a qualified accountant. And, in fact, Breen studied economics at Queen’s University in Belfast before moving to Dublin to train with KPMG.After qualification, he joined the firm’s corporate finance department, not really sure of what he wanted to do in the long term.
One morning while reading The Irish Times, Breen and spotted an opportunity that would come to define his career.
“There was an ad for DCC, which described itself as a ‘venture and development capital company’. I thought it looked interesting. I thought, ‘wouldn’t it be great to get in front of these entrepreneurs, and get in to see lots of different businesses’. I thought it would be exciting.”
He made some enquiries about Flavin, and was interviewed by him for the job.
“If you’re young and you want experience,” Breen says, “it isn’t about the business. It’s about the people. I thought: ‘Thick as I am, I’ll learn from these people.’ It evolved from there. Jim was hugely talented individual, but in fairness, it wasn’t just him.”
Breen worked in a variety of roles, spanning DCC’s evolution from a venture company to an industrial holdings company to its current incarnation as a diversified services company. He has run three of its divisions (fuels, technology and environmental) and eventually rose to become group managing director, chief operating officer and Flavin’s heir apparent.
He comes over all coy, however, when asked if he ever looked at Flavin and thought “I could do his job”.
“It’s not terribly fashionable now when you say you’ve been in the one company for 31 years. They say could you not think of anything else. But the job was always changing, growing. So there was always development. “Jim was the founder, and he was here 32 years when he resigned. I never thought too much about [succeeding him]. I always thought that, if you did a good job and you added value, there would be opportunities. I’d like to say there’s no politics at DCC. But I’m sure there’s some.”
Breen’s opportunity came in 2008, when Flavin resigned after the appointment of a High Court inspector to the company. This followed DCC’s loss of a Supreme Court insider trading case involving Flavin and Fyffes, in which DCC had had held a stake.
Messy case
The inspector later found that no action should be taken against any DCC executives, but the messy case will never be up in lights in the company’s history books. Breen, perfectly cordially, edges the conversation away from it.
Was the Fyffes case the darkest chapter in DCC’s story?
He doesn’t immediately answer. Instead, he reaches for a booklet showing its more than two decades of dividend growth and almost unbroken profit growth.
“There has been lots written about the Fyffes thing, but the DCC business kept growing through that period,” he says. “Again, it is a tribute not only to Jim, but to the wider management team.”
Can you recall describing when you heard about the loss of the Supreme Court case as your “JFK moment”? According to the inspector’s report, Breen used this phrase in an interview for the report.
“That’s not a comment of mine. It’s a long time ago . . . eight years. We don’t think about [the Fyffes case] too much here anymore, to be honest.”
DCC is firmly part of the Irish business establishment. Such large companies always have their own distinct way of doing things. Breen doesn’t introduce the term “the DCC way” to our conversation, but he doesn’t bat away the notion when asked if there is one.
“Part of the culture is, we don’t like arrogance or politics in here. We like to keep the head down and get on with it. There’s always something you are concerned about, there are always risks. But I think the business is in good shape. There are no guarantees in life. But the performance has been strong.”
He says there is two things he often tells investors. “If you went into one of our operating businesses, I’d like you to come out and say a) that team was a little bit more entrepreneurial than you might expect from the operating division of a PLC; and, b) the team felt more ownership of the business than you might expect.”
Breen, as every chief executive likes to do, pays tribute to his management team. Most of DCC’s senior managers have spent the best part of their careers there.
“We have to be careful about this – I think it’s a real positive – but if you work somewhere for 31 years, you feel like it’s your business. But it is not your business.
“A really good discipline is to wake up every morning and remember the shareholder pays the wage every month. But business has been growing year after year, and you feel like you have been part of building that.”
CV
Name: Tommy Breen
Age: 57
Position: chief executive DCC
Home: Dublin.
Family: Married, with five children.
Something you’d expect: “I admire business leaders who have managed to achieve sustained success over the long term.”
Something that might surprise: “A lot of people wouldn’t know that I’m a bit of a sportaholic. Horse racing is my thing. I am also a Manchester United fan.”
