Global temporary power provider Aggreko delivered a strong set of half-year results, with operating profits up 25 per cent to £159m, but slowing growth rates, higher bad debt provisions and falling operating cash flow make us cautious.
International Power reports underlying revenue growth of 17 per cent and, buoyed by a record order book - up 16 per cent on the prior year - management expects a strong second half, although margins are unlikely to match those in the same period in 2011. Its 'local' business reported underlying revenue growth of 15 per cent, implying growth had slowed from 21 per cent in the first quarter to 9 per cent in the second quarter.
Aggreko's bad debt provision increased by £17.3m to £53.6m, as debtors were slow to pay, and this also put stress on working capital, causing operating cash flow to fall from £155m to £133m. Chief executive Rupert Soames confirmed the target of £415m in capital investment in the fleet and, combined with the recent Poit Energia acquisition in Brazil, this caused net debt to rise £421m on a year ago to end the period at £678m.
Analysts at Deutsche Bank forecast full-year adjusted pre-tax profits of £366m and EPS 100p (£327m and 88.1p for 2011).
AGGREKO (AGK) | ||||
|---|---|---|---|---|
| ORD PRICE: | 2,062p | MARKET VALUE: | £5.53bn | |
| TOUCH: | 2,061-2,064p | 12-MONTH HIGH: | 2,347p | LOW: 1,519p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 345p* | NET DEBT: | 73% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 637 | 121 | 31.7 | 7.20 |
| 2012 | 734 | 148 | 41.0 | 8.28 |
| % change | +15 | +22 | +29 | +15 |
Ex-div: 5 Sep Payment: 5 Oct *Includes intangible assets of £180m, or 67p a share. | ||||
