Aggreko revenue stable while earnings slide

Aggreko’s group revenue rose 16% in its first half to £792m pre-exceptional items, the company said on Wednesday, although excluding pass-through fuel and currency fluctuations, it was in line with the same time last year.

The FTSE 250 power generation specialist said its operating profit was down 3% to £79m, while it dropped 11% excluding pass-through fuel and currency fluctuations.

Its profit before tax and exceptional items was £63m, down 10% from the £71m reported at the same time last year, although the board said that was in line with market expectations.

Aggreko left its full-year guidance unchanged.

The board did report a “strong” operating cash inflow of £184m, compared to £100m a year ago, as its working capital initiative began to deliver results.

It also said there were improvements on payables, although further work was required on receivables.

“I am confident that the changes we have made in the last two years are delivering results, with our first half performance supporting our view that, Argentina aside, we will grow this year,” said chief executive Chris Weston.

“In particular, we have made good progress enhancing our product offering, improving our customer experience and reducing our cost base, all of which makes us more competitive.”

On the operational front, Aggreko said its power solutions utility’s order intake was 430 MW in the year-to-date, a serious fall from 875 MW last year, with an off-hire rate of 15%, compared to 20% 12 months ago.

Its revenue for power solutions industrial grew 20%, with a Eurasia year-to-date order intake of 179 MW, improving from 165 MW in the first half of 2016, while rental solutions revenues grew 2%.

Excluding oil and gas, those rental solutions revenues were ahead 7%, the Aggreko board claimed.

“As we look forward, energy markets and technologies are evolving and we continue to invest and grow our capabilities to take advantage of the opportunities this presents,” Chris Weston added.

Looking at the board’s ‘business priorities’, Aggreko said it expected the initiatives outlines in 2015 to be delivered by the end of 2018.

It said its new customer relationship management software and website was now love across “much of the business”, which had “significantly” improved the customer experience, with a full roll-out expected in 2018.

Aggreko claimed it was on track to deliver cash savings of more than £100m, while its product portfolio continued to develop, with “market leading” diesel, gas and heavy fuel oil solutions, as well as the recent additions of solar and storage to further reduce the cost of energy for customers.