Aggreko powers ahead with demand rising

The FTSE 100 stock surged 6 per cent as the Glasgow-based group said its power projects arm – which builds and runs temporary power plants – has quoted on a record level of contracts over the past six months, although these are yet to translate into firm deals.

Aggreko said revenues fell 6 per cent in the July to September quarter in the absence of last year’s London Olympics boost – when it powered 39 Games venues – although were up slightly on an underlying basis.

Its power projects arm runs contracts such as powering an iron ore mine in Australia for BHP Billiton and supplying energy to German army camps in Kosovo.

Underlying sales in the division dipped 2 per cent, with order intake roughly level with a year ago, despite a 50 mega watt (MW) contract to keep the lights on in Guinea’s capital Conakry, which had been hit by power cuts.

But revenues in its local business, which rents equipment ranging from small generators to large industrial cooling towers, grew 4 per cent on an underlying basis, lifted by near 10 per cent growth in the Americas.

Across the group, sales in its Australia and Asia Pacific region slumped 17 per cent, as contracts end in Japan and Indonesia.

But sales grew 6 per cent in the Americas and 8 per cent in its Europe, Middle East and Africa region, lifted by 430 MW of gas contracts in Mozambique and Cote d’Ivoire.

Aggreko has suffered over the past year as the absence of the Olympics, the withdrawal of US troops from Afghanistan and the tough global economy weigh on its business.

Aggreko said it is on course to meet earnings expectations for 2013, although analysts at Investec Securities plan to drop their pre-tax profits forecast by about £10m to £330m due to the strength of sterling.

That would compare with profits of £365m a year earlier.

Investec analysts said: “Whilst there are likely to be further currency-related forecast downgrades, the underlying message is largely unchanged.

“The local business continues to perform well against some tough comparisons and power projects needs new customers to sign on the dotted line.”

Aggreko has a base in Doncast-er.