Glasgow-based power firm Aggreko monitoring coronavirus after FY profit leap

Glasgow-headquartered temporary power specialist Aggreko has seen its shares close up by 5.1 per cent at 709.2p after hailing a rise in full-year profits.

The firm has a $200m (156m) contract to supply the Tokyo Olympics later this year. Picture: AFP/Getty Images.

But it pointed out that it is following the development of the coronavirus outbreak in the run-up to the Tokyo 2020 Olympics. The business – one of Scotland’s largest industrial companies – said pre-tax profit grew to £199 million in 2019, an underlying change of 13 per cent and buoyed by its rental services arm seeing operating profit growing by 22 per cent to £133m.

Total group revenue fell by 1 per cent to £1.61 billion, “in line with the prior year excluding the 2018 Winter Olympics and early design and project management revenue for Tokyo 2020 Olympics”.

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The firm relocated its headquarters to Scotland in the 1970s. Picture: John Devlin.

Chief executive Chris Weston said the 2019 results show the improvement in the group’s financial performance. He added that the proposed 3 per cent increase in the final dividend to 18.3p reflects confidence in the sustainability of its performance. “We are well-positioned to meet our customers’ evolving needs in the changing energy market.”

The firm also stated that it has completed an assessment to identify aspects that might be affected most by Brexit. “We do not expect the impact on the group’s business activities to be material because the large majority of them take place outside the UK and the EU,” it said.

Contigency plans

The company earns about 5 per cent of its revenue from the UK and 11 per cent from EU markets. “We have taken some actions and developed contingency plans to reduce the potential impact on the group of the UK leaving the EU without a new trade agreement at the end of December 2020.”

As for coronavirus, Aggreko said it is closely following the situation, both in terms of the Tokyo Olympics and the group more widely, and has implemented many measures to protect its staff and to prepare for possible consequences of the virus. “We will continue to follow developments closely and will take further action to protect our people and business as appropriate.”

Markets.com analyst Neil Wilson said regarding Aggreko, which he noted has a $200m (£156m) contract to supply the Tokyo Olympics, that there is “clearly a big worry should the [event] not go ahead”.

The firm currently expects to deliver results in line with expectations for 2020. Weston said: “We believe that a continued focus on the four strategic priorities first set out in 2015 will underpin the achievement of our mid-teens [return on capital employed] target in 2020 and beyond.”

Aggreko has worked on sporting events such as the London 2012 Olympics and the European Championships in Glasgow.

It moniker was created by combining the Dutch word for generator – “aggregaten” – and the name of founder Luc Koopmans. It relocated its headquarters to Scotland in the 1970s, and has helped deliver power for Pink Floyd touring the US in the 1980s and the Grateful Dead in the 1990s.