TEMPORARY power and temperature control specialist Aggreko has agreed to buy the bulk of a Canadian rival’s business for C$37 million (£18m), paving the way for further expansion on the other side of the Atlantic.
Glasgow-based Aggreko said the purchase of ICS Group would not only establish it in the North American heating market, but will provide a geographic footprint in cities such as Calgary and Winnipeg, where it does not operate.
The acquisition is the first for Aggreko since chief executive Chris Weston took charge at the start of the year and he said it would help the group expand into other areas of North America.
Weston, the former head of international downstream operations at Scottish Gas parent company Centrica said: “The acquisition of ICS enhances our temperature control business in North America and gives our customers an unparalleled range of equipment and service options.
“Temperature control products are used extensively in our target sectors and benefit our core business as they generally require associated power.”
Weston added that the purchase of ICS, which was founded in Alberta in 1999 and generated revenues of C$18.2m during the 12 months to July, “underlines Aggreko’s clear commitment to deliver growth both organically and through bolt-on acquisitions”.
ICS specialises in temporary heating, ground thawing and concrete curing services for clients in the construction, industrial, events and oil and gas sectors. The firm, which has other locations in Edmonton, Fort McMurray, Saskatoon and Winnipeg, will add more than 60 employees and 2,100 fleet assets to Aggreko’s rental solutions business.
Today’s deal came less than a month after Aggreko, the world’s biggest temporary power provider, warned that the year ahead would be “difficult” as it posted a slide in first-half profits and said it would cut about 600 jobs amid the downturn in oil and gas markets.
With business being hit by civil war in Yemen and a slowdown in the North American energy sector, the group expects to deliver full-year pre-tax profits for 2015 of between £250m and £270m – down from the figure of £289m reported for 2014 and well below analysts’ previous forecasts of about £293m.
Aggreko, which provides temporary power stations in developing economies and generators for large-scale events such as the Olympics, World Cup and recent European Games in Azerbaijan, said the tough market conditions mean that margins and returns would be lower in the short term.
Unveiling a 21 per cent drop in pre-tax profits to £102m for the six months to the end of June, Weston said the firm – which employs about 8,300 people around the world – would be cutting some 600 jobs and reducing capital expenditure on its fleet in a bid to save £80m by 2017.
A shake-up of the business will include the “streamlining” of back-office processes and the closure of some depots, but Weston said that the impact on jobs in the UK would be “minimal”.
During the first six months of the year, Aggreko spent £138m on its fleet as it invested in gas-powered generators and refurbished its diesel units. It is now forecasting fleet capital expenditure of £270m for the full year, down from an earlier figure of £300m.
Weston, who took the top job after former boss Rupert Soames left to join outsourcing firm Serco, has overhauled the group’s structure by replacing three regional divisions with two separate units. Its rental solutions arm incorporates its power and temperature control equipment operations in Europe, North America and Australia Pacific, while the power solutions business is focused on developing economies.