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Aggreko disappoints on poor end markets

Aggreko continues to feel the strain of oil and gas weakness
July 24, 2015

There has been more bad news for Aggreko (AGK) as management at the temporary power supplier revealed that it expects the group's half-year results to be behind market expectations. Management blames a continuing slowdown in its North American oil and gas businesses as well as security challenges at its Yemen operations. Shares in the group dropped 14 per cent on the group's trading update.

IC TIP: Sell at 1235p

As volumes in the North American shale oil basins have declined, pricing and volumes for Aggreko's shale oil business have also fallen. The group's offshore oil and gas business in the Gulf of Mexico is also starting to feel the impact. What's more, a 325 megawatt gas contract in Bangladesh is likely to be less favourable than previously expected by management.