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Aggreko hails sport as profits hit by pound

TEMPORARY power generation company Aggreko has hailed the performance of its temporary generators during the Commonwealth Games in Glasgow but currency headwinds have hit the group's interim profits.

success: Aggreko hailed strong performances at events like the Commonwealth Games, above. Picture: Nick Ponty
success: Aggreko hailed strong performances at events like the Commonwealth Games, above. Picture: Nick Ponty

The Glasgow firm deployed 100 people to look after 130 generators and more than 200 kilometres of cabling across the sporting event.

Interim chief executive Angus Cockburn said the business had no problems coping with the changing weather patterns seen across the event. He said: "The generators are used to working in minus 50 degrees in Siberia and doing plus fifty degrees in the middle of the Saudi dessert in the summer. They coped with anything Scotland threw at them"

Aggreko said the Games and the football World Cup in Brazil had added around £9 million to its revenue in the first half of the year with the total group figure, excluding fuel, flat at £745 million.

However the strength of the pound caused a fall in profits in the period to June 30.

At a pre-tax level the figure dipped nine per cent from £144 million to £130 million.

While Aggreko said it remained on course to hit full-year targets Mr Cockburn admitted currency fluctuations could reduce annual revenue by up to £150 million and profits by close to £50 million.

He said: "Currency is a little bit like a fairground rollercoaster. What goes up one minute goes down the next. Sometimes it is a gentle incline, other times it is a steep incline.

"My experience over the last 14 or 15 years is that over the long term currency does not have a profound impact on value. We are very focused on the operational performance of the business, not the accounting translation of it.

"I am far more interested in what we are earning in rupees in India or roubles in Russia or pesos in Mexico than what these translate to in Sterling in the short term."

In the six months Aggreko saw strong performance in its Americas business driven by shale oil and gas in the United States with underlying revenue up 25 per cent to £340 million.

Mr Cockburn said further capital expenditure in the US was planned while there was also strong growth in Argentina, Colombia and Peru. Excluding the impact of the World Cup trading in Brazil was relatively flat.

Across Europe, Middle East and Africa there was a 14 per cent rise to £280 million.

Mr Cockburn highlighted Aggreko's deployment in Panama where it is providing cover for lower than expected hydro generation in the country as well as selling into the wholesale market for the first time.

He said: "Panama is facing a challenge for a period of time. It is the first contract we have ever signed where we are playing in the wholesale market so we are selling electricity into the spot market. We are very excited and encouraged by that development." Alongside that Aggreko is seeing increasing demand for its products in the commissioning and construction of offshore wind farms with the initial UK sales now expanding to Germany and South Africa.

Mr Cockburn said: "We are looking at it in a number of other countries around the world."

Asia Pacific fell by 16 per cent to £125 million as a result of the slowdown in Australian mining and contracts in Japan ending.

Mr Cockburn indicated China, India and south east Asia were all seeing strong sales growth but said: "It is not easy [in Australia] but I think there are early signs of an improvement and hopefully we are beginning to reach the bottom there." Order intake for the first half of the year came in at 488 megawatts, ahead of the 397MW for the same period of 2013.

Mr Cockburn is leaving on September 30 and said he is considering different unspecified options for when he steps down.

Ken Hanna will become executive chairman until new chief executive Chris Weston joins next year. Shares closed up 19p, or 1.1 per cent, at 1740p.

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