Aggreko profit falls amid commodities slump

Glasgow-based mobile power provider Aggreko said its 2015 revenue fell 3% to £1.56 billion and pre-tax profit fell 13% to £252 million as low commodity prices affected its operations in the oil, gas and mining sectors around the world.

But the firm said it is on target to deliver £80 million in cash savings by 2017 “from reorganisation and procurement” and Aggreko shares rose at least 9%.

In its outlook for 2016, Aggreko said its power solutions utility business has started the year with a strong order book and the signing of a two year extension of contracts in Japan. 

However it warned: “We continue to monitor the geopolitical situation in Yemen, Libya and Venezuela.”

Aggreko said its power solutions industrial business is seeing softer trading conditions in Singapore and some of its markets that are more exposed to the mining sectors.

“However year to date power volumes are up on the prior year, driven by continued good performances in the Middle East, Russia and Africa,” said the firm.

Its rental solutions business unit, in particular its North American business, has had a slow start to 2016.

“Overall, we expect profit before tax and exceptional items to be slightly lower (for 2016) than the prior year on a constant currency basis, in line with current consensus.”

Diluted earnings per share for 2015 was down 13% to 71.68p.

Aggreko plans to maintain its 2015 full year dividend of 27.12p, the same as 2014.

“We have ended 2015 with a strong balance sheet, with net debt slightly down; as we continue to generate good levels of operating cashflow; and maintain discipline in our investment in new fleet,” said Chris Weston, Aggreko chief executive.

“We have also maintained the full year dividend in line with last year, reflecting our continued confidence in the strength and prospects of the business which provides a much needed service to our customers. 

“As we enter 2016 I am encouraged by the prospect pipeline we are seeing and pleased by the progress we are making with our business priorities.”

About the Author

Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.