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Margins in retreat at Aggreko

Aggreko suffers as a result of Australia Pacific downturn and currency headwinds.
March 10, 2015

Aggreko's (AGK) full-year figures suffered in 2014, as a decline in its Japanese power project activities combined with the ongoing downturn in the Australian mining sector, to reduce trading profit at its Australia Pacific business by 46 per cent to £49m. And matters weren't helped by £40m in adverse currency movements. Overall, the group revealed a 13 per cent drop in trading profit to £306m, on a margin of 19 per cent - a 300 basis point reduction year on year.

IC TIP: Sell at 1578p

There was mixed performance in the Americas. Underlying revenue for the group's 'power projects' division, which supplies electricity to government departments and utilities, grew by more than third. This was achieved despite a decline in remits from the US military. However, Aggreko's 'local' trading operations, which generate revenues from self-operating hire equipment, faced macroeconomic problems in Brazil. As a result, trading profit for the Americas was down 4 per cent to £141m.

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