Aggreko (AGK) unveiled a £200m return of capital in these annual results - the last with long-standing chief executive Rupert Soames at the helm. Scheduled for June, this is worth 75p a share and was made possible by tight control of capital expenditure, which cut net debt by £230m. But the distribution does little to redress recent underperformance. Weighed down by weak trading in the company's so-called 'power projects' division, which sells electricity to governments and utilities, Aggreko's stock has fallen 19 per cent over the past 12 months.
Trading profits in power projects dropped 5 per cent on an underlying basis to £196m last year, as work for the US military in Afghanistan and reconstruction work in Japan post-Fukushima dried up. The outlook here remains challenging, with chief financial officer Angus Cockburn describing customers as "still cautious". Aggreko's other business line, called 'local', which hires equipment for clients to operate themselves, fared better, with trading profits up 11 per cent to £163m as Aggreko expanded in emerging markets. Average megawatts of power on rent in the local business were 9 per cent higher year on year, with Aggreko saying emerging markets grew well above this rate.
Management expects group trading profits to be flat at constant currencies this year, as growth in the local unit offsets softness in power projects. But the company warns that exchange rates will hit reported results if they stay where they are. Mr Cockburn - who will act as interim chief executive until a replacement is found for Rupert Soames, who leaves in April to join Serco (SRP) - says that currency movements have a translational impact on the numbers, but also a business impact on the power-projects division, as any depreciation of emerging-market currencies pushes up the price of Aggreko’s products, which are invoiced in US dollars.
Broker UBS cut its 2014 earnings per share forecast by 6 per cent to 77.8p (2013: 93.3p) to reflect the currency headwinds.
AGGREKO (AGK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,546p | MARKET VALUE: | £4.2bn | |
| TOUCH: | 1,546-1,547p | 12-MONTH HIGH: | 2,034p | LOW: 1429p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 424p* | NET DEBT: | 32% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 1.02 | 244 | 63 | 12.6 |
| 2010 | 1.23 | 304 | 79 | 18.9 |
| 2011 | 1.40 | 324 | 98 | 20.79 |
| 2012 | 1.58 | 367 | 104 | 23.91 |
| 2013 | 1.57 | 333 | 92 | 26.3 |
| % change | -1 | -9 | -12 | +10 |
Ex-div: 23 Apr Payment: 27 May *Includes intangible assets of £151m or a 56p share | ||||
