Shares of Glasgow-based Aggreko, the world’s largest temporary power firm, rose more than 10% after it said revenue rose 10% to £857 million in the six months to June 30 and that the firm is on track to deliver on its full year guidance.
Profit before tax was £59 million, up 8% on an underlying basis, and interim dividend will be maintained at 9.38p per share.
Average megawatts on hire during the six months was 6,560 MW, up from 6,520 MW, and Aggreko recorded “successful execution” of power provision for the Commonwealth Games and South Korea Winter Olympics.
“These are encouraging results that keep us well on track to deliver our full year guidance,” said Aggreko CEO Chris Weston.
“As we continue to execute on our strategy, we have also completed a comprehensive review of the group’s expected performance over the medium term.
“Based on this review, and the detailed action plans we have developed, we are confident that the group can deliver a return on capital employed in the mid-teens in 2020 with potential for further improvement beyond this.”
In its outlook, Aggreko said: “Our good first half performance, combined with the expected improvement in Power Solutions Industrial and continued growth in Rental Solutions, give us confidence we are on track to deliver our guidance for the full year of profit before tax in line with 2017, excluding the effects of currency.
“Fleet capital expenditure, previously guided to be in line with 2017 (£246 million), is now expected to be approximately 10% lower, as the group has continued to focus on capital efficiency and fleet utilisation.
“We continue to expect the group tax rate to be around 31% for the full year and, based on our current projections, this will increase to around 35% going forward, as a result of changes in the geographic mix of our profits.
“We also expect a small inflow in second half working capital and year end net debt/EBITDA of between 1.2 and 1.3 times.
“Over the last three years we have strengthened the foundations of the business through the execution of our strategy, which has provided the group with a solid platform and is beginning to drive growth.
“We will build on this with our detailed plans focused on operating margins and capital efficiency, supported by a £50 million cost reduction programme, to deliver an improvement in the returns of each of our businesses.
“With overall higher returns in Rental Solutions and Power Solutions Industrial, together with a significant improvement in Power Solutions Utility, we expect the group to deliver a return on capital employed in the mid-teens in 2020, with potential for further improvement beyond this.”