Weakness in the US oil and gas industry has dragged down revenues at temporary power provider Aggreko, in its sixth consecutive quarter of declines
Underlying revenue fell seven per cent in the third quarter, the FTSE 250-listed group said in a trading update today, though full-year results are expected to be "broadly in line" with expectations. Profit before tax at the firm, which hires out power equipment to big energy users, is forecast to reach around £225m.
A continued downturn in North America's oil and gas sector weighed on the company's rental solutions business, where revenues dropped by seven per cent, even though it posted gains in other regions such as Europe and Australia-Pacific.
As a result, the company is reviewing the value of its specialist oil and gas equipment, including its small generators, which could prompt a writedown.
Shipping sector declines also dragged on revenues at the group's industrial power solutions business, where reported revenues fell nine per cent and Aggreko also flagged ongoing negotiations to replace an energy contract in Argentina, saying its offer "represents a significant discount to the historic pricing".
Aggreko's share price was down 3.3 per cent in afternoon trading, to 775.5p. The group's stock reached a third-quarter peak in July of nearly 1,300p, before sliding in August when it announced it had experienced a "difficult" first half.
Chief executive Chris Weston remained upbeat, saying:
Whilst the environment over the last nine months has been challenging I am pleased with our strong order intake of over 1GW and with the progress that we are making on the implementation of our business priorities. We are working through the status of our contracts in Argentina and continue to navigate the tough conditions in upstream oil and gas in North America.
I am confident that our continued focus on delivering our priorities is creating a stronger and more resilient group for the future.