By Kristy Dorsey
Shares in Aggreko closed firmly higher yesterday after the company said it expects profits for 2020 to be “slightly ahead” of the top end of its own recent guidance.
In a short trading update, the Glasgow-based provider of temporary equipment used to power events such as the Olympic Games and the Glastonbury Festival said the pre-tax figure would come in above previous guidance of £80-£100 million. Aggreko made a pre-tax profit of £199m in 2019, so the new guidance indicates a year-on-year fall of approximately 50%.
The FTSE 250 firm, which also supplies equipment to a range of industrial sectors around the world, said the upgraded forecast followed “continued recovery in activity levels” across a number of markets. In addition to higher-than-expected profits, the firm said it had also cut its net debt by approximately £200m.
READ MORE: Tokyo Games deal now worth $315m to Glasgow power giant
The trading statement comes after Aggreko revealed earlier this month that it has agreed revised terms to its deal to provide power to the Tokyo Olympic and Paralympic Games, which have been rescheduled to take place in July and August.
The contract is now expected to have a revenue value of approximately $315m (£231m) to Aggreko, up from an estimate of $250m in April of last year. The latest revision reflects the impact of the Games’ delay from the original 2020 schedule, including costs incurred by Aggreko from providing warehouses, offices and apartments for staff in Japan.
Looking ahead, the company maintained its guidance for a pre-tax profit in the range of £170m to £190m for 2021. This was despite the recent strengthening of the pound, which suppresses the value of revenues and profits generated in foreign currencies after they are translated back into sterling.
READ MORE: Aggreko unveils multi-million pound blueprint for Dumbarton campus
Aggreko is in the early stages of a £4.5m upgrade to its production facilities in Dumbarton, which will bring 300 employees across three locations together on a single campus at its existing site at Lomondgate Park. The investment is part of plans for Aggreko to become net zero in carbon emissions from its own operations by 2030.
Aggreko is due to announce its full-year results for 2020 on March 1. The company’s shares closed yesterday’s trading 35p higher at 674.5p, an increase of more than 5%.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here