Aggreko sticks to outlook if Tokyo Olympics go ahead

Aggreko posted a 10% increase in annual profit and said it expected to meet expectations for 2020 if its $200m (£157m) contract for the Tokyo Olympics is not cancelled by the coronavirus outbreak.

Operating profit for the year to the end of December rose to £241m from £219m as revenue fell 8% to £1.6bn. Excluding pass-through fuel and currency movements operating profit rose 13% and revenue dipped 1%.

At the FTSE 250 company's rental business operating profit rose 25% to £133m as power solutions profit fell. Aggreko said it expected to meet expectations for 2020 profit and stuck to its target of return on capital in the mid-teens for 2020 – up from 11.2% in 2019.

Aggreko provides power generators for events ranging from the Glastonbury pop festival to the Ryder Cup golf tournament. The company said it was monitoring the effect of the coronavirus, which has raised doubts about whether the Tokyo Olympics will take place in July and August.

The company said: "Our underlying performance during 2019 provides good momentum into 2020 and our preparations for the Tokyo 2020 Olympic and Paralympic Games are progressing well. Notwithstanding this, we are monitoring closely the development and potential impact of the coronavirus outbreak, both in terms of the Tokyo Olympics and the group more widely. At this point, however, we currently expect to deliver results in line with expectations for 2020."

Aggreko shares rose 7.7% to 726.60p at 09:12 GMT. Before the results the shares had dropped 20% in 2020.

Neil Wilson, chief market analyst at Markets.com, said: "Aggreko, which has a $200m contract to supply the Tokyo Olympics, says it is monitoring the outbreak of the coronavirus but is sticking to its guidance. There’s clearly a big worry should the Olympics not go ahead."

Aggreko is recovering from a period of poor trading caused by falling oil prices and the end of profitable long-term contracts. The company declared a final dividend of 18.3p a share, up 3%, which it said was a measure of its confidence. The annual dividend rose 2% to 27.7p a share.