Aggreko cancels dividend but plans for Olympics

Glasgow-based Aggreko, the world’s largest temporary power firm, on Monday withdrew its dividend and its 2020 performance guidance to investors amid the coronavirus crisis.

However, Aggreko also said it is continuing its work in preparation for the Tokyo 2020 Olympic and Paralympic Games.

“We are in regular dialogue with our customer on the Tokyo 2020 Olympic and Paralympic Games and, in line with the current International Olympic Committee guidance, we are continuing our work in support of delivering the Games, which are due to start on 24 July 2020,” said Aggreko in a stock exchange statement.

On its dividend, Aggreko said: “Despite the strong financial position of the group, given the rising level of uncertainty as to how the situation will develop, alongside the other measures we are taking to preserve the group’s cash position the board has decided to withdraw its recommendation to pay a final dividend at the forthcoming AGM. 

“We will review this decision again later in the year once the outlook becomes clearer. 

“We recognize that this is a significant decision, but the board believes that it is an appropriate and prudent measure to take at this point as the group seeks to preserve its strong liquidity, cashflow and financial position through these most uncertain times.”

On its outlook, Aggreko said: “We have a global, diversified business, with a robust balance sheet and we are taking immediate measures to contain our costs and protect our strong financial position.

“However, given the continued uncertainty, we do not believe it is possible to retain the group’s 2020 guidance as communicated at our full year results on 3 March.

“We will continue to monitor the situation closely and provide further updates as necessary.

“Beyond the AGM on 23 April, our next scheduled announcement is the interim results on 6 August, alongside which we had planned to provide an update on our strategic priorities. 

“While we believe that a continued focus on our four strategic priorities set out in 2015 will underpin the performance of the business over the longer term, given the current market uncertainties we have taken the decision to postpone this strategic update.”

On its financial position, Aggreko said: “We have entered this period of uncertainty with a strong financial position. 

“As at the end of February the group had immediately available liquidity of £606 million, comprising £66 million of available cash, £458 million of undrawn committed facilities arranged on a bilateral basis with eight international banks and £82 million of undrawn uncommitted facilities.  

“The financial covenants attached to the committed facilities are that EBITDA should be no less than 4 times interest and net debt should be no more than 3 times EBITDA.  

“The covenants exclude the impact of IFRS 16 ‘Leases’ and, on that basis, at 31 December 2019, these ratios were 14 times and 0.9 times respectively …”