Aggreko powers on despite increasing debt

PORTABLE power group Aggreko, whose UK head office is in Cannock, says it is trading in line with expectations.

In a pre-close trading statement for the year ending December 31, it said group revenues for the year are expected to be in the region of £1.6 bn (up 13%), and profit before tax and amortisation is expected to be around £365m (up 12%), which is in line with previous guidance.

Underlying revenues in the firm’s international power projects business, which exclude pass-through fuel and foreign exchange movements, are expected to grow by about 12% in the fourth quarter, with growth for the year as a whole expected to be around 15%.

But Aggreko said it expects to end the year with net debt of around £620m, an increase of around £250m over the prior year, with the main drivers being the acquisition of Poit Energia in April of this year, and higher levels of both capital expenditure and working capital.

And underlying trading margins in international power projects for the year are expected to be about 34%, which is lower than last year principally due to increased bad debt provisions and mobilisation costs on its Mozambique contract.

“Although all the customers against whose accounts we have taken bad debt provisions have made substantial payments during the second half we continue to expect bad debt provisions to be around $85m by the year end,” Aggreko said.

The firm’s order intake in the fourth quarter has been stronger than in the third quarter, with around 220 MW of new contracts signed to date. Major orders include 100 MW in Cote d’Ivoire and 74 MW in Japan.

“We anticipate that order intake for the year will be over 1,000 MW and we expect to close out the year with around 10% more capacity on-hire than at the end of 2011,” the firm said.

Reported results for the year in Aggreko’s local business are likely to show revenues around 24% higher.

“We expect underlying revenues, which excludes the benefit of the London 2012 Olympics contract and the Poit acquisition as well as adjusting for foreign exchange movements, to be around 8% higher in the fourth quarter than in 2011, with growth for the year as a whole expected to be around 12%,” Aggreko said.

“Europe and Middle East underlying revenues for the year are expected to be up around 5%, North America up by around 15%, and Aggreko International’s local business up by around 19%. Underlying trading margins for the year as a whole are expected to be slightly higher than the prior year.”

Fleet capital expenditure in 2012 is expected to be around £420m, of which about £30m was related to the London Olympics.

The firm warns that after a year of strong growth in 2012, the economic environment it will be facing in 2013 is particularly uncertain in many of its markets and it is difficult at this stage to provide a definitive view of the likely pattern of trading in 2013.