Aggreko sent cock-a-hoop by Olympic supply deal

THE world’s biggest temporary power supplier expects a bumper summer thanks to an increase in work for the Olympic Games and an $80 million (£50m) contract in the Dominican Republic.

Glasgow-based Aggreko said on Thursday that its contracts for the London games will be worth about £50m, up from the previous £35m estimate.

Underlying group revenues – which exclude big one-off events such as the Olympics and the Asian Games – jumped by 21 per cent in the first three months of the year.

The firm said it also expects to complete the £140m takeover of South American peer Poit Energia by the end of the month, two months ahead of schedule.

Aggreko added: “We have had a very strong start to the year in both the local and international power projects businesses.

“We continue to believe that we will deliver another year of good growth in 2012.”

Analysts welcomed the upbeat results, with Paul Checketts at Barclays pointing out that electricity demand in developing nations is forecast to grow by 35 per cent between 2015 and 2030, while countries struggle to finance the building of permanent power stations.

Checketts added: “The shares aren’t cheap. But Aggreko is set for a decade of double-digit earnings growth with a continued high return on capital.”

His observation was supported by Thursday’s two-year deal to supply the northern electrical distribution company in the Dominican Republic with gas turbines capable of generating 100 megawatts of power.

Aggreko said the Caribbean nation needed the extra capacity to help it cope with the rapid growth of its economy and the ensuing demand for power.

The group, led by chief executive Rupert Soames, also reported “strong” revenue growth in North America, Russia and parts of the Middle East.

Net debt rose by £63m to £428m during the first quarter as the company builds more generators to supply power to the Olympic Games.

Richard Curr, head Of dealing at Prime Markets, said: “The sheer momentum behind Aggreko is so strong that the trials and tribulations of the eurozone and subsequent market crash have gone all but unnoticed.

“With a very strong start to the year and expectations for strong growth for the year as a whole, seemingly nothing can stop the rise and rise of the Aggreko share-price juggernaut.”

Mike Murphy, an analyst at Numis Securities, raised his full-year, pre-tax profit forecast for Aggreko to £380m from £370m following the trading update.

Murphy said: “The first-quarter interim management statement was slightly more positive than we expected. We retain our positive stance based on the outstanding growth for the group.”

Seymour Pierce analyst Caroline de La Soujeole added: “We note that the outlook statement is decidedly more upbeat than that given at the full-year results.”