Aggreko warns on profits over Argentina contracts
Aggreko, the Glasgow-based temporary power specialist, today issued a profit alert due to the repricing of legacy contracts in Argentina.
The group said the deals in Argentina, where it has been operating since 2008, were signed at a time when “industry dynamics were different” and the risks of operating in the country were higher amid strict foreign exchange controls and bond defaults.
Chief executive Chris Weston added: “We expect to see growth across the group in 2017, augmented by incremental annualised cost savings of £25 million from the second half.
“However, this will be more than offset by the significant impact of Argentina and as a result we expect full-year profit before tax and pre-exceptional items to be lower than last year.”
His comments came as Aggreko – which has cut 700 jobs under a cost-saving plan – reported a 12 per cent drop in pre-tax profits, excluding one-off items, to £221 million for 2016 – a year that Weston described as “challenging”.
Revenues for the 12 months to the end of December came in 3 per cent lower at £1.5 billion, but Weston said he was “pleased with the progress that we are making across the group implementing our transformation programme to return the business to growth”.
He added: “These improvements, taken with our market leadership, technical capability and the need for our products being as relevant as ever mean I am confident we are well on track to create a stronger business for the future.”