Aggreko to power ahead as City predicts 'stunningly good' profits

Published on Sunday 9 September 2007 00:40

RUPERT Soames, the chief executive of temporary power supplier Aggreko, will tell the City that projects such as the California Mardi Gras and droughts in Western Africa have helped double profits in the last quarter.

Analysts say that they are expecting Thursday's interim results to be "stunningly good" as Soames, who last year earned a bonus worth 100% of his basic salary because of an "exceptional" year, demonstrates the global momentum in the business.

They said the company's growth opportunities in Africa, the Middle East, Latin America and Asia are now being clearly shown and would be "only the start of the story".

Nick Spoliar, analyst at Bridgewell Securities, said: "This is a company that a few years ago had a few problems, but the current team led by Rupert Soames have pursued a slightly different model. They have concentrated on regenerating power in the southern hemisphere, where there are growing economies, and it has been much more successful.

"There is an ongoing demand for their services so the growth story has a very long way to run."

Consensus analysts estimates that pre-tax profit for the six months to June 30, 2007, will come in at 46.6m up from 29.6m from the previous year. The interim dividend will also rise 8% at 2.7p per share.

The Glasgow-based company will focus on the source of growth which is the driver for the rapidly changing shape of the group. The firm is heavily involved in the developing world, with large projects in Gabon, in Western Africa, and has also been on hand when disaster strikes, most notably in the wake of Hurricane Katrina. It also supplies temporary power for events such as the Super Bowl and this year's Cricket World Cup.

In July Soames announced that the group had been selected as the exclusive supplier of temporary power equipment to next year's Olympic Games in Beijing. The prestigious deal will also see it provide maintenance and repair services, and receive some marketing rights to the event. Similar agreements at previous Olympics have netted temporary generator providers around 20m.

The deal marks Aggreko's return to the Olympics arena - it supplied equipment to the 1996 games in Atlanta. The agreement follows Aggreko's opening of a depot in Shanghai earlier this year and its acquisition of General Electric's energy rentals unit for 110m last summer.

Spoliar said: "There has been such a succession of fantastic news from these guys and successive upgrades that each time it happens you think it can't happen again. I don't know if they can go on producing a rabbit out of the hat every time but it is pretty irrelevant because the underlying drivers of the business are very good."