Aggreko’s Rental Solutions Underlying Revenue Leaps 26% in First 9 Months
The Rental Solutions division of Aggreko increased underlying revenue 26 percent for the first nine months of 2018, and was 24 percent up excluding hurricane-related work in North America. In North America revenue jumped 32 percent year over year and reflected particularly strong growth in oil and gas as the company has seen a recovery in this sector from prior-year levels. Excluding the impact of hurricane-related work, revenue was up 27 percent.
Aggreko’s Continental Europe business had a strong nine months with growth in most countries, most notably The Netherlands and Belgium, and benefited from the Ryder Cup in France in September. Aggreko’s Northern Europe business had strong growth, driven by its Next Generation Gas contracts in Ireland and an increase in activity in the oil and gas sector, as well as revenue from the Glasgow Games.
Aggreko’s Australia Pacific business has seen increased activity in the mining sector and also benefited this year from a 100 MW contract delivering emergency power in Melbourne during the summer.
Rental Solutions’ revenue is 52 percent of Aggreko’s revenue.
The Power Solutions Industrial division, which is 27 percent of Aggreko’s revenue, grew 11 percent during the nine-month period. The year’s performance was supported by the South Korea Winter Olympics, excluding which underlying revenue increased 2 percent. The company performed well in Latin America and Eurasia, with the latter driven by growth in the oil-and-gas sector. Market conditions in the Middle East was challenging because of the impact of the Qatar blockade, and underlying revenue in Africa also declined year over Year.
In the Power Solutions Utility division, which is 21 percent of the group’s revenue, underlying revenue decreased 14 percent, as expected, reflecting lower rates and volume in Argentina and the continuing effect of off-hires in Zimbabwe, Bangladesh and Japan.
Year-to-date average megawatts on rent declined 15 percent at 2,691 megawatts compared to 3,169 megawatts on rent in the first nine months of 2017, reflected an increased year-to-date off-rent rate of 35 percent. The company expects the full-year off-rent rate to be around 40 percent.
Aggreko remains on track to deliver its guidance of full-year profit before tax in line with 2017, excluding currency effects.
“These are encouraging results that keep us well on track to deliver our full year guidance,” said Chris Weston, CEO. “As we continue to execute on our strategy, we have also completed a comprehensive review of the Group’s expected performance over the medium term. Based on this review, and the detailed action plans we have developed, we are confident that the Group can deliver a return on capital employed in the mid-teens in 2020 with potential for further improvement beyond this.”
