Aggreko reveals new £50m deal

Business Correspondent/Personal Finance Editor

Friday 13 April 2012

Aggreko enhanced its credentials as Scotland's stock market darling yesterday with another upside surprise on trading and a £50 million contract in Latin America.

POWERING FORWARD: Aggreko chief executive Rupert Soames is pleased with figures. Picture: Chris James.

Custom byline text:

simon bain

The group also revealed its Olympics contract this summer would be worth around £50m – one-third more than expected.

Shares in the temporary power supplier – which has just built a new factory employing more than 600 in Dumbarton – jumped 69p to 2228p as it reported a "very strong" first quarter, with both its local and international power projects businesses racking up core revenue growth of over 20%.

The icing on the cake was the unveiling of a two-year project to supply 100mw (megawatts) of gas-powered generation in the Dominican Republic. The group said: "We have had a very strong start to the year in both the local and international power projects businesses. "The performance of the local business for the year as a whole will depend upon trading in the summer months, but the current environment is favourable and is supported by the London Olympics which we now anticipate will have a contract value of around £50m. We continue to believe that we will deliver another year of good growth in 2012." It added that its £140m acquisition of Brazilian temporary power provider Poit Energia, announced on March 26, would now complete this month, earlier than originally anticipated.Rupert Soames, chief executive of Aggreko said: "We are delighted to have been selected to help address the temporary power needs in the Dominican Republic. This will improve the stability of the national grid which has had to deal with rapidly increasing demand due to the rapid economic growth of the country."The contract means International Power Projects, the division set up by Mr Soames six years ago to focus on such opportunities, has secured 450mw of new contracts in the year to date.Mr Soames, grandson of Sir Winston Churchill, has this week been in David Cameron's entourage on his visits to Indonesia and Japan, where Aggreko has major customers. Speaking to The Herald from Singapore, Mr Soames said the Prime Minister, who recently visited the new Dumbarton factory, was "a very powerful ambassador for British business" and had been "very helpful" to the company. He added: "We were in Jakarta.The demand for power there is increasing by between 8% and 10% a year – that is an incredible amount of megawatts."The growth of the international business in the past five years had surpassed everybody's expectations, Mr Soames said, due to "very rapid increases in demand for electricity combined with the impossibility for many of these countries of building new capacity fast enough".He added: "The business in power projects is pretty much balanced between Asia, Africa and South America, which is a very good thing. I have something of an emotional attachment to Africa – I love it and enjoy going there and doing my best to help these countries develop their infrastructure."Celso Marranzini, vice president of the Dominican Republic state utility CDEEE, said the agreement was "part of the short-term solution to the energy situation that the country has suffered for more than 40 years, and the presence of Aggreko in the Dominican Republic is a clear sign of confidence in the country's economic stability".Aggreko said underlying group revenues, excluding major events such as the 2011 Asian Games and this year's Olympics, grew by 21% in the first quarter, and trading margins were slightly above last year.On whether the Olympics would help showcase the company, Mr Soames said: "I hope so – provided we don't make a horlicks of it."On the challenges ahead for Aggreko, whose market value has risen five-fold since 2008 to top £6 billion, Mr Soames said: "Only the paranoid survive. We are permanently worrying about what can go wrong and the more we do, the less can go wrong." Aggreko's net debt has increased by £233m in the past year, including £148m returned to shareholders.

Commenting & Moderation

We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.

Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.

Aggreko reveals new £50m deal

Commenting & Moderation

MOST READ

SPONSORED LINKS

MOST COMMENTED