Glasgow's Aggreko eyes 2021 Olympics boost as first-half profits cool

Aggreko, the Glasgow-headquartered temporary power provider, remains hopeful of a $250 million (£190m) boost from a rejigged Olympics next summer after reporting a slide in first-half revenue and profits.

Aggreko has a manufacturing base in Dumbarton. Picture: John Devlin

Chief executive Chris Weston said the firm had responded to the Covid-19 pandemic by taking immediate steps to reduce its cost base and increase its focus on cash generation.

He pointed to early signs of stabilisation in trading, although conditions remain difficult in the oil and gas and events sectors.

When the coronavirus crisis struck, Aggreko had been on track to deliver a 2020 financial performance in line with market expectations, but it has since been hit by a wave of event cancellations and postponements, including the Tokyo Olympics until summer 2021.

The group was forced to take a range of actions including the imposition of travel restrictions, limiting its fleet capital expenditure, cancelling its 2020 annual bonus scheme and annual salary review process, the introduction of hiring freezes and a “significant” reduction in its temporary workforce.

But it has avoided making any direct employee redundancies and has not had to tap into the government furlough scheme.

Weston said: “The immediate steps we took to reduce our cost base and increase our focus on cash generation have enabled us to maintain the strong financial position in which we entered the crisis, while supporting national efforts through practical assistance and without drawing on UK government financial support.

“While the outlook remains uncertain and we do not expect to see our usual second half seasonality, the gradual improvement in demand we have seen in some sectors since May gives us confidence that we can deliver a pre-exceptional profit before tax this year in the range £80-100 million.”

The interim results showed that underlying group revenue fell 12 per cent to £667m, driven by the impact of the virus and lower oil prices. Underlying operating profit of £64m was down 15 per cent and profit before tax declined by 13 per cent to £47m. Despite that, the board declared an interim dividend of 5p per share.

Aggreko said it had access to liquidity of more than £700m, including cash on hand of £123m.

Meanwhile, the group announced the appointment of Mark Clare as a non-executive director and chairman designate with effect from 1 October. Current chairman Ken Hanna will step down at the firm’s 2021 annual general meeting.

Clare is currently chairman of Grainger and is a former boss of Barratt Developments.

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