Aggreko still powering ahead after it raises profit forecasts

Published on Tuesday 26 April 2011 22:47

SHARES in Aggreko continued their bullish run yesterday after the company upgraded its 2011 profit guidance on the back of strong trading in the first quarter.

At the group's annual meeting in Glasgow, chief executive Rupert Soames told shareholders that revenues during the three months to the end of March were up 9 per cent on the previous year, driven by orders for 280 megawatts of the group's temporary power supply equipment.

Stripping out the effects of last year's "annus mirabilis" - which was boosted by major events such as the World Cup, the Asian Games and the Vancouver Winter Olympics - revenues would have been 18 per cent higher.

Since the end of the first quarter, Aggreko has also agreed to supply a further 200 megawatts to Tokyo Electric Power Company as it deals with the continuing aftermath of the disaster in Japan. That contract will run for a minimum of 12 months from June, with an estimated value of $100 million (60.4m).

As a result, the group now expects trading profits to be slightly ahead of those in 2010, representing underlying growth of 20 per cent. Aggreko had previously anticipated growth in the region of 15 per cent.

Soames and the rest of the executive team spent much of yesterday's meeting reiterating the group's aim to return more cash to shareholders as it brings down its dividend cover. Chairman Philip Rogerson, who will retire from the board at next year's AGM, told investors that circulars detailing the return of 150m in capital would be sent out next month, followed by a meeting to approve the move in June.

"There is no point in holding on to cash just to sit there and stare at it," Soames said afterwards.

The group expects to invest about 390m this year, including an extra 70m to further bulk up its fleet of power generation equipment. Soames said this was keeping the 300 workers at Aggreko's assembly plant in Dumbarton working overtime through the holidays. "It (70m] may not sound like a lot when you say it quickly, but trust me, it is quite significant," he said.

Inchcape chairman Ken Hanna, who joined the Aggreko board in October, will replace Rogerson, who has been on the board of the Scots firm since its demerger from Christian Salvesen 14 years ago, and will have been chairman for ten years by the time he retires.

"Although I greatly enjoy my role with Aggreko, I believe that there comes a time when a change of leadership is appropriate," he said.

Shares closed up 4.4 per cent, or 76p, at 1,786p.