Why the World Cup is reversing the fortunes of Aggreko

Some good news for generator hire specialist Aggreko, as it announced this morning that it's been chosen to supply power for next year's FIFA World Cup in Brazil and the Commonwealth Games in Glasgow.

The firm also said that its full year results for 2013 will be "slightly ahead of expectations". Underlying group revenues for the year will be around three per cent higher than last year, with trading profit at about the same level - although this is excluding the impact of the London Olympics, acquisitions and currency fluctuations.

Things haven't been looking too rosy for the company. In an update last December, it said that expectations would be affected by slowing demand in emerging markets. And a 'sell' note from investment bank Numis, on the back of a lack of contract wins, saw it lose 2.2 per cent in trading on Friday.

Contract wins for the temporary power provider have been pretty low over this year, and this morning, it said that it expects revenue in its power projects business to be around two per cent lower than last year, with trading margins for the year likely to be down on the prior year at about 30 per cent.

Numis analyst Mike Murphy said last week that "Aggreko needs to announce annual contract wins of circa 900 megawatts just to stand still". Orders for the year-to-date tally to over 700 megawatts, said the firm today.

But the news of the two weighty wins mean 2014 could well be a better year for the firm, confirming HSBC's view that Aggreko's problems have been over-stressed and are more to do with the cyclical nature of the market.

JP Morgan has said that it expects Aggreko's backlog of potential orders from emerging market countries to begin to clear. And they, like HSBC, have rated the company neutral.