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Aggreko leaps £350m as it reveals new deals

SCOTTISH temporary power supplier Aggreko has enjoyed a near-£350 million surge in its stock market worth, after telling the City its 2013 results would likely exceed expectations and unveiling contracts for next year's Commonwealth Games and football World Cup.

PROUD: Aggreko chief executive Rupert Soames is delighted the company has won the Games contract. Picture: Chris James
PROUD: Aggreko chief executive Rupert Soames is delighted the company has won the Games contract. Picture: Chris James

Aggreko did not disclose the value of the contract to power the Commonwealth Games, in its home city of Glasgow, but this is believed to be worth about £5 million in terms of revenues. The company said yesterday that, together, the Commonwealth Games and World Cup contracts would generate revenues of about $25m (£15m).

Aggreko meanwhile told the City that its pre-tax profit for the year to December 31, before amortisation charges, was expected to be at least £335 million. This would be down from about £365m in 2012, but the latest guidance was comfortably ahead of the consensus City forecast for 2013, prior to yesterday's trading update, of about £330m.

Shares in Aggreko jumped by 129p or 8.5% to 1645p on the back of the trading update. Aggreko shares traded around £24 in September last year, having rocketed from levels below 400p in March 2009. The jump in the share price yesterday raised Aggreko's stock market worth by about £347m to around £4.43bn.

Asked if he was pleased by the share-price reaction to the trading statement, Aggreko chief executive Rupert Soames replied: "It is better than going down, isn't it? We would rather it was going up than going down."

He added: "I think that the market is relieved, and we are going to do what we said we were going to do."

Aggreko said that it would, next summer, supply temporary power across the Commonwealth Games' 13 sports venues and the athletes' village. It added that power would be supplied via 103 individual generator sets, connected through a network of more than 1000 distribution boards and 200 kilometres of cabling. The system, it noted, would be supported "24/7" by a dedicated team of engineers and technicians.

Asked if he was pleased to have won this contract, given the Commonwealth Games were being staged in Aggreko's home city, Mr Soames replied: "We are pleased as punch. We are proud and pleased. We are very excited, proud to be associated with the Commonwealth Games, and we are big supporters of it. (It is) particularly nice, as it is going to be on our own home turf."

Aggreko also announced yesterday that it had won the contract to power the 2014 World Cup in Brazil, for which Scotland failed to qualify.

Mr Soames quipped: "There is Scottish and UK interest in the World Cup, beyond the rolling of the ball."

Aggreko told the stock market that its 2013 revenues were expected to be around £1.57 billion, similar to last year. In 2012, Aggreko made revenues of £1.58bn.

The company said, on an underlying basis, it expected revenues would be around 3% higher in 2013 than last year. This "underlying" comparison excludes the impact of the 2012 London Olympics, Aggreko's acquisition in 2012 of South American power rental business Poit Energia, "pass-through fuel" supplied to customers as part of contracts, and currency movements.

Aggreko said it expected underlying revenues in 2013 would be up by around 8% in the Europe, Middle East, and Africa region, and by about 7% in the Americas. Revenues in Asia-Pacific, it added, were expected to be around 12% lower than last year, principally because of its Tokyo Electric Power Company contracts in Japan finishing and some "off-hires" in Indonesia.

An Aggreko spokesman noted that the TEPCO contracts had been awarded following the Japanese earthquake and tsunami in 2011.

Aggreko said that 2013 revenues in its power projects business, which provides longer-term generation, were expected to be around 2% lower than last year. It added that, as anticipated, underlying trading profit margins for the year were likely to be down on 2012 at around 30%, but noted order intake for the year to date in this division was more than 700 megawatts.

Mr Soames put Aggreko's current workforce at its manufacturing plant at Dumbarton at between 250 and 300.

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