Aggreko last week said it anticipates that a very strong performance in international power projects will be partly offset by weaker conditions in its European and North American businesses. The company made the announcement in a trading update issued in advance of its interim results to be announced Aug. 25.
The company expects that headline revenues will grow by at least 20 percent and that profit before tax will be about 55-percent higher than the prior year. In constant currency, and excluding pass-through fuel, it expects revenues to grow by around 5 percent and trading profit by about 15 percent.
“Conditions in most of our local businesses have deteriorated in the second quarter, most noticeably in temperature control, where volumes are well down on last year,” the company said. “Although there are regional variations, in aggregate our power business is holding up well, and megawatts on rent are currently at similar levels to last year, excluding the Beijing Olympics. Generally, across most products and geographies, there has been some pressure on rates. We expect that revenues in constant currency in the first half will be about 10-percent lower in North America; about 11-percent lower in Europe and the Middle East; and at similar levels to last year in Aggreko International’s local businesses, adjusted for the impact of the Olympics (-20 percent unadjusted). Looking ahead to the second half, we expect that conditions in the local business will continue to be challenging, and will compare with a very strong second half in 2008, when we had the benefit of both the Olympics and very high storm-related revenues in North America.”
Aggreko reported that its international power projects continue to trade strongly and it expects that business will grow its revenues in the first half, in constant currency and excluding pass-through fuel, by around 40 percent, and by more than 80 percent in sterling terms.
Though the rate of new projects has slowed, the prospect pipeline remains strong, Aggreko said. Project extensions are running at a healthy rate, and margins in the first half are likely to be at record levels. In the second half, the company expects the business will continue to grow but, given the very large number of new projects commissioned in the second half of 2008, it will be at a noticeably slower rate.
Overall, the board maintained the guidance for the year given in March, expecting profits in constant currency to be at similar levels in 2009 to those achieved in 2008.
Houston-based Aggreko North America is No. 10 on the RER 100.