Power surge for Aggreko as shares hit another record high

Published on 23/06/2008 22:11

GENERATOR provider Aggreko surged to a record high yesterday on the back of the growing world-wide demand for power.

The Glasgow-based firm, which provides electricity generators for projects around the world, said first-half revenue would be around 25 per cent ahead of last year, with profits about 40 per cent higher.

It expects profits for the full year will be above current forecasts, the latest in a string of upgrades delivered by the company.

After warning about a potential weakening in the US construction industry to which the company has a small exposure, chief executive Rupert Soames declared: "It's probably less bad than we thought it was going to be".

Aggreko's US business had also been boosted by demand created by recent floods in the midwest and by hot temperatures in the New York area, as the company also provides temporary air conditioning units.

"If we achieve our historical average level of storm revenues, we would expect trading profits in North America to be at similar levels to last year," Aggreko said in a statement.

In the group's international business, which covers Africa, demand continues to surge, with resource-rich nations becoming wealthier because of strong commodity prices.

Aggreko revealed yesterday that it had won its first major project in South Africa, providing 40 megawatts of temporary power, and said results for the international division would be "outstanding".

Meanwhile Aggreko's European business had been boosted by the contract to supply power to the current European football championships, which has given an additional "few million euros" of revenue.

Euro 2008 is one of a number of the world's largest events Aggreko is supplying power for in the coming months, including this week's Glastonbury music festival, the upcoming Open Golf Championship and the Beijing Olympics.

Preparations for the Beijing Olympics are "well in hand" with the company providing more than 140 megawatts of power across 37 venues.

"The world of events has, so far, been completely untouched by the woes of the rest of the world," Soames said yesterday.

To cash in on demand, the company has again raised its capital expenditure estimate by 15 million to 265m, most of which will be spent on its rental generation fleet.

Analyst consensus for pre-tax profits for the full year rose from about 145m before yesterday's statement, to around 157m.

That would represent a near doubling of the 83.1m the company made in 2006.

Shares in Aggreko, which were already trading near record highs before yesterday, added another 64.5p, or 10 per cent, to 709p, valuing the company at more than 1.9 billion.

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