SHARES in Aggreko fell by more than 11 per cent yesterday as the temporary power group continued to the count the cost of renegotiated contracts in Argentina.
In an update on its third quarter trading performance, in which it maintained full year forecasts, Aggreko revealed that revenue in its power solutions utility business was down 15 per cent, driven by re-pricing and off-hires in Argentina.
The company’s challenges in the country stem from the renegotiation of contracts which were originally signed under better terms in 2008.
Aggreko saw overall revenue climb one per cent on constant currency, but foreign exchange tailwinds saw the reported number up eight per cent. Stripping out Argentina, underlying sales were up three per cent.
“The trading performance continues to support our view that, Argentina aside, we will grow this year,” said the company, led by chief executive Chris Weston.
The group also warned that it was continuing to see delays in payments from some customers, particularly in Africa where it said liquidity remained a challenge.
Aggreko also said Venezuela remained “an exceptional situation”, noting that while it continued to support the country during a difficult period it was operating at a “considerably reduced number of megawatts and have reduced our costs to a minimum”.
In its rental solutions business, revenue climbed nine per cent. This included the impact of powerlines being knocked out by hurricanes in the Southern United States and the Caribbean.
Revenue in North America was up 10 per cent, or three per cent excluding the impact of the hurricanes, which Aggreko said generated incremental work but also led to the cancellation of scheduled maintenance work.
Following the acquisition of battery storage firm Younicos in July, Aggreko said integration was progressing well with a healthy pipeline of opportunities.
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