GLASGOW-based temporary power company Aggreko is on track for another bumper profits haul after raising its full-year earnings outlook on the back of strong trading.
The company said it expects full year profits to reach £320 million, ahead of analysts’ expectations of around £317.3m.
In 2010 the company posted a pre-tax profit of £304.4m, 24.8% ahead of the year before.
Chief executive Rupert Soames, the grandson of wartime Prime Minister Sir Winston Churchill, said: “I am delighted to see both our businesses producing underlying growth of 20% or more, and we have good momentum going into the fourth quarter.”
On an underlying basis (in constant currency and excluding the one-off impact of the FIFA World Cup), revenue grew by 22%. Headline revenue rose by 13%.
The company said in its interim management statement: “Although the prospects for the global economy remain uncertain, the strength of our recent trading performance, and our view of the prospects for the fourth quarter mean that we now believe that pre tax profits for the year will be at least £320m. This represents underlying growth in profits for the year of over 24%.”
However, the good news was not reflected in the share price as investors, who have seen the stock rise by almost a quarter this month, took profits and sent its shares down as much as 4.9% in early trading.
However, the stock bounced back and closed at 1710p, a 6p or 0.4% gain on the day.
This means that Aggreko is valued at £3.7 billion.
Aggreko said its international power projects (IPP) arm had taken 944 megawatts of orders in the year so far with 210MW added in the quarter. This included an additional 60MW in Kenya and 47MW in Brazil.
The company said: “Capacity on hire at the end of the quarter was 21% ahead of the prior year.”
Aggreko took a £14m charge in its half-year results to the end of June to cover three overdue debtors. The group said yesterday it has made “good progress” resolving the issue and has taken a partial write-back on the debt.
“We now expect that the trading margin in IPP for the year as a whole will be a little higher than the prior year,” Aggreko said.
In its local business, underlying revenue grew by 20% in the third quarter. Headline revenue increased by 8%.
Within this, revenue in North America grew by 10%, and in Europe and the Middle East by 20%.
Unrest in the Middle East amid a spate of pro-democracy revolts has weighed on Aggreko’s shares this year.
But the company said yesterday: “The Middle East business has recovered strongly and we have recently signed our first sizeable contract with an industrial company in Iraq, which we see as being an important market in the future.”
It added: “We expect underlying trading margin in the local business for the year as a whole to be similar to the prior year.”
Seymour Pierce analyst Caroline de La Soujeole, who has a “buy” rating on the stock, said: “Meeting peak capacity demand in emerging markets will always be a problem and Aggreko is well-placed to respond to this.
“We believe Aggreko has an edge over its peers through its scale and geographic reach.”
The company said its net debt had increased by £167m over the quarter to £424m, which it attributed largely to a capital return of £148m undertaken in July.
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