DCC Energy’s LPG business supplies LPG (propane and butane) in both cylinder and bulk formats to commercial, domestic, agricultural and industrial customers across seven countries in Europe. The product is used where there is no natural gas grid for agricultural and industrial processes and for space heating, hot water and cooking. It is also used as road fuel (autogas), as an aerosol propellant and for powering fork lift trucks. Unlike the oil distribution markets which remain highly fragmented, the LPG markets across Europe are relatively consolidated and DCC Energy LPG has a leading position in each market in which it operates.
LPG – France
On 18 May 2015, DCC Energy reached agreement with Shell to acquire Butagaz S.A.S. (‘Butagaz’) and the initial consideration for the business was paid on 2 November 2015. With a total expected acquisition cost of approximately €437 million, Butagaz was DCC’s largest acquisition and represented a major step forward in the expansion of DCC’s LPG business. Butagaz is the second largest LPG distribution business in France where the market size is approximately 2 million tonnes. Butagaz has a market share of approximately 25% and operates from 46 depots nationally, distributing to 250,000 customers and to 26,000 points of sale. We estimate that Butagaz cylinders are used by approximately 4 million end user customers annually. Butagaz has a strong supply base and sources LPG from a number of supply points across France and also from Belgium, Spain and Germany. The business has an experienced management team and a high quality sales, marketing and operating infrastructure.
LPG – Britain
Flogas Britain is the clear number two LPG distributor in Britain. Since the successful integration of BP’s LPG operations acquired in 2012, the business has consistently focused on organic growth, and in particular the switching of large commercial customers from using oil as their prime energy source to LPG. Today the business has a market share of circa 30% of the addressable market of approximately 800,000 tonnes, served through a nationwide infrastructure of 56 locations. In addition to LPG, the business has continued to develop its position as the leading distributor of liquefied natural gas (‘LNG’) as an energy solution primarily to large industrial businesses. Flogas Britain also distributes a wide range of LPG fuel appliances such as mobile heaters and barbecues, as well as renewable products such as biomass boilers and solar panels. Furthermore, the business has recently entered the market for the distribution of natural gas to commercial users.
LPG – Ireland
Flogas Ireland, operating in both the Republic of Ireland and Northern Ireland, is the number two LPG distributor in Ireland and has continued to grow organically to an estimated 40% share of the addressable market of approximately 200,000 tonnes. The business operates from 6 depots throughout the country including 3 importation facilities. In addition, Flogas Ireland has established a leading position as a distributor of natural gas to the commercial market and also markets a range of heaters and barbecues and is currently developing a renewables offering.
LPG – the Netherlands
In the Netherlands, where DCC Energy’s LPG business trades under the Benegas brand, the business has an overall market share of 26% of the addressable market of approximately 320,000 tonnes and is joint market leader. Operating from one central depot and a number of third party locations, the business delivers to commercial, industrial, agricultural and domestic customers in the Netherlands and Belgium and is also a significant player in the sale of LPG for aerosol and autogas use.
LPG – Sweden & Norway
In Sweden and Norway, Flogas operates from 6 third party operated locations which include 3 key importation facilities. Flogas is the market leader in both these markets with 54% and 38% market shares in Sweden and Norway respectively. The addressable market is estimated to be approximately 340,000 tonnes in Sweden and 190,000 tonnes in Norway.