Aggreko puts brave face on as first quarter revenues slide

Catherine Neilan
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Aggreko has insisted full year figures will come in as forecast, despite a double-digit drop in revenues during the first quarter.

The figures

Underlying revenue for the three months to 27 April was 14 per cent behind last year, with reported revenue down 17 per cent, the temporary power provider said.

Revenues in its rental solutions arm fell nine per cent year on year, with revenues in North America dropping on a "combination of the previously noted softness we have seen coming into the year and against a particularly strong comparator in upstream oil and gas revenues in the same period last year".

Outside North America, the division grew and, in response to a hydro shortage in Tasmania, Aggreko said it was "in the process of mobilising 108MW, which will begin to have a positive impact on our performance from the second quarter".

Revenues in its power solutions industrial arm dropped 10 per cent against tough comparatives, which were lifted by revenues from the European Games. The business grew in Russia, Middle East and Africa, although it faced tougher conditions in Latin America, in particular Brazil and Chile.

In its power solutions utility arm, revenues was 19 per cent lower than last year, as the firm took a hit on the ending of its diesel contract in Panama.

Aggreko will spend £250m on fleet capital expenditure, up from the £237m spent last year, focusing on "investment in more efficient gas and diesel engines".

Why it's interesting

The plant and machinery hire group had warned last month that profits this year would be lower than in 2015 - a year in which profits had already fallen 13 per cent to £252m - as its energy customers scaled back operations in the wake of falling oil prices.

And while in the past it has benefited from involvement in major sporting events, last year it pulled out of the bidding process for the Rio de Janeiro Olympic Games this summer.

Over the last 12 months, Aggreko's share price has fallen 35.4 per cent.

What Aggreko said

Chief executive Chris Weston said: "Performance in this first quarter has been in line with our expectations. While some of the markets we operate in continue to be challenging I am encouraged by the order intake to date. Our guidance for the full year, of profit before tax slightly lower than 2015, remains unchanged."