The Glasgow-based global player led the gainers in the UK's FTSE-100 index of leading shares yesterday, after calming City nerves by declaring that trading in the third quarter had been in line with expectations. Aggreko's shares finished 91p higher at 1608p, giving it a stock market worth of more than £4.3 billion.
Loading article content
Chief executive Rupert Soames said: "I think some of the reason for the share price going up is there were some people (who thought), given the quite difficult economic circumstances in emerging markets, that we might be coming out with bad news, but we are not. We are in line, and I think people are quite pleased with that."
Mr Soames noted Aggreko's workforce at its manufacturing plant at Dumbarton, which fluctuates with levels of capital expenditure on new kit, was lower than a year ago.
He said about 250 people were now working at the Dumbarton factory, down from nearly 400 around this time last year.
However, he emphasised there had been no redundancies among permanent employees. He said the fall in the workforce had resulted from a reduction in contractors, which could be reversed quickly if required.
Mr Soames expected the Dumbarton workforce to remain at about 250 for the foreseeable future, based on current capital expenditure plans.
He said: "What we do is we have a core of about 230 permanent staff (at the plant), and then we have sub-contractors who come in when we are very busy. We have kept the permanent staff and reduced the number of sub-contractors."
He added that capital expenditure would have to "pick up quite a lot" before there was a need to increase the workforce at the Dumbarton plant from the current 250, but highlighted the ability to "flex" it up very quickly if required.
Among the major contracts for which Aggreko is currently bidding are those to power the football World Cup in Brazil and the Commonwealth Games in Glasgow next year.
Asked whether Aggreko would be powering the Commonwealth Games, Mr Soames replied: "That has not been adjudicated yet. We have certainly been very actively bidding for it."
The consensus City forecast is that Aggreko will make profits of about £330m, before tax and amortisation, in its current financial year to end-December. It made profits of £365m on this basis in 2012, a year in which trading was boosted by its contract to power the London Olympics.
Mr Soames reiterated the fact yesterday that most of the major sporting events fall in even-numbered years.
Aggreko, which also provides temperature-control equipment such as air conditioners, yesterday said underlying group revenues and trading profit margins in the three months to September 30 were slightly ahead of the same period of last year. This underlying basis of comparison excludes the London Olympics, which contributed £37m of revenues in the third quarter of 2012. It also excludes "pass-through fuel" supplied as part of contracts with customers, and the impact of currency fluctuations.
Aggreko said that third-quarter revenues in its international power projects division, which focuses on long-term schemes and has been awarded major contracts in Africa in recent times, were down 2% on a year earlier on an underlying basis, with trading margins slightly lower.
But Aggreko said revenues in the third quarter in its "local" businesses around the world, which deliver a vast array of generally shorter-term projects, including sporting events and provision of power following natural disasters, were up 4% on a year earlier on an underlying basis. Mr Soames noted this rise had been achieved against a strong prior-year comparative.
Summing up, he said: "I think the key points (are) the power projects business is performing as we said it would do - which is a bit anaemic and facing some headwinds - but the local business is doing well."
He added that the Asia-Pacific region had been "very tough", with demand down and competition quite intense.
However, he declared Aggreko was a "bit less pessimistic" than it had been on the outlook for emerging markets in Asia.