Temporary power provider Aggreko saw its shares surge 14 per cent yesterday despite a slide in annual profits on the back of the weak oil price and a warning that it expected to see a further fall in earnings this year.
The Glasgow-based group reassured investors by saying it had “continued confidence” in its prospects and its already announced plans to deliver cash savings of £80 million by 2017.
Aggreko chief executive Chris Weston said that the markets had “feared worse, and they probably linked us too much to the oil price or emerging market growth, and they didn’t appreciate the resilience in the company”.
He added: “The progress we’ve been making on our business priorities, and taking out costs, has helped. Our order book coming into the year is looking promising, so all those factors have led to the [share price] reaction.”
It came after the group said pre-tax profit excluding exceptional items fell by 13 per cent from 2014 to reach £252m, which was at the lower end of guidance provided at the half-year stage. Additionally, it flagged that it maintained the full-year dividend per share at 27.12p.
Group revenue in the year dropped slightly to £1.56 billion from £1.58bn, and Aggreko said sector and geographic diversity mitigated the impact of low commodity prices and lower emerging-market growth.
Cost-cutting plans have triggered 700 job losses from its global workforce, but Weston said there had been no impact on its 700-strong UK headcount. Weston said Aggreko employs about 450 people in Scotland, split between its Glasgow head office and its Dumbarton facility, boosting headcount at the latter “to develop the expertise we have in the business”.
He also said the looming EU referendum was not a major concern to Aggreko, with the “vast majority” of its business outside Europe, and North America its largest market.
Weston said US revenues were flat, despite a 26 per cent slide in its oil and gas business, as growth in other areas such as petrochemicals and refining offset that decline.
When asked when he expected Aggreko to return to growth, Weston said: “2016 will be a year of transition, during which time we’ll take a number of actions around our customers, technology and efficiency, and in the medium term that will lead to growth, but I’m a little reluctant to give any kind of forecast for 2017.”