Aggreko increases investment to plug into more emerging markets

Published on Thursday 4 March 2010 19:54

AGGREKO, the Glasgow-based temporary power provider, has increased investment plans by £20 million this year, after winning a string of major international contracts in February.

The FTSE-100 company, which will provide power for the broadcasting of this year's World Cup, reported a 28.7 percent rise in pre-tax profits for 2009 to 246.5m, and a 25 per cent increase in its total dividend to 12.6p.

The rise came despite a fall in demand from most western economies, in particular Europe and North America.

Chief executive Rupert Soames said despite most western economies moving back into growth, there was little sign of a strong pick-up in demand.

"We think we're bumping along the bottom and there's no tangible sign of recovery, although demand in places like Asia is starting to pick up."

Aggreko's record results were driven by demand in its emerging markets business, International Power Projects.

The business, which focuses on large-scale projects of up to 100 megawatts, saw a 26 per cent increase in revenues last year.

In the first eight weeks of 2010 the business signed contracts for 364MW, including major deals in Oman and Panama.

Yesterday, Aggreko said that it expected demand from emerging markets to remain strong, prompting it to forecast 200m of capital expenditure in 2010, 20m more than it had previously planned.

Almost all the money will be invested in building new generators from Aggreko's manufacturing base in Dumbarton.

Soames said: "We've got a strong pipeline, stronger than it was a year ago, and some of it is beginning to convert."

Aggreko claims that as demand for power increases, the amount of investment planned for new power plants – and the retirement of old plants – will leave a "shortfall in supply" of up to 50,000MW a year in the future, creating a long-term opportunity for the company.

Shares in Aggreko, which hit a record high this week, closed down 2p at 1,040p.