Aggreko issues profits warning for 2017

Power supplier Aggreko issued a profits warning on Tuesday as it said 2017 results would be offset by the “significant impact” of a reduction in pricing on contracts in Argentina.

The company reported a 24% fall in 2016 pre-tax profits to £172m after exceptional items with revenues 3% lower at £1.5bn. The dividend is held at 27.12p a share.

"We expect to see growth across the group in 2017, augmented by incremental annualised cost savings of £25m from the second half. However, this will be more than offset by the significant impact of Argentina and as a result we expect full year profit before tax and pre-exceptional items to be lower than last year."

Aggreko said its North American rental business was showing signs of stabilisation after a “difficult 2016”, impacted by the low oil price.

“Most sectors are up on the prior year to date and the higher oil price is giving ground for cautious optimism. We expect our Europe and Australia Pacific businesses to continue to perform well throughout 2017,” the company said.

“In power solutions, the industrial business is expected to perform well, driven by two of our largest businesses, the Middle East and Eurasia.”

“In power solutions utility, the pipeline remains healthy and is well spread geographically, although at this early stage in the year the order intake has been lower than in the prior year. Results in this division will also reflect the material impact of pricing renegotiations in Argentina, our last legacy contract.”