Aggreko says electric results here to stay

AGGREKO chief executive Rupert Soames said yesterday that the company's latest shining results were "no flash in the pan", with power shortages set to rise around the world.

Glasgow-based Aggreko, which has become a world leader in the supply of temporary power and temperature management, reported a thumping 60 per cent increase in profits to 47.5 million, as turnover rose by a third to 317.5m. The company's shares fell 8.5p to 541.5p yesterday - but remain 80 per cent higher than a year ago.

Aggreko, which has averaged a 50 per cent earnings per share increase in its past four six-monthly sets of results, again told the market to raise its targets, saying profits for the full year would be "well ahead of expectations".

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The market consensus, which had previously sat at just over 110m for the full year, were increased to about 120m following bullish comments on the company's outlook. Soames said the factors that had led to the rise were all long term.

The demand for power in the developing world was growing far more quickly than generation capacity, and in many developing countries infrastructure is not being maintained, leading to supply problems, he said.

In the roughly 90 countries the company operates in, about half suffer from electricity shortages in some form, and the situation is not expected to improve.

Aggreko estimates that by 2015 the gap between demand for power and power supply will have grown from the current 50 gigawatts to more than 600 gigawatts.

"That means that on current trends that the world is going to be short of the entire generation capacity of the European Union," Soames said.

"That's a huge amount and obviously a huge opportunity for us."

Soames, who is in line to receive a bonus worth 100 per cent of his salary if the company's performance is considered exceptional by the board, said the company was "chuffed" with its performance, with all major areas experiencing growth of at least 20 per cent.

Growth in the international division - the world excluding Europe and North America - was the strongest, increasing 55 per cent.

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As well as providing vast generation in the developing world, Aggreko has been involved with many high-profile events such as the Glastonbury Festival, the Cricket World Cup and the Superbowl. After missing the contract for the past two Olympic Games, the company was recently named as sponsor of the Beijing games, which Soames said "leaves us well positioned" to supply the event with power.

Although the games would provide less than 5 per cent of group turnover, Soames said the "extremely prestigious" event would give a boost to its fledgling Shanghai business, which recently won its first major mining contract.

Capital expenditure is currently running at twice depreciation, at about 200m a year as the company struggles to keep up with demand.

The company has doubled the capacity of its factory in Dumbarton, and has staff working in two shifts. It is now shipping 15 large generator sets a week, mainly to Africa, South America and Asia.

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