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RESULTS: Temporary power provider Aggreko puts back-to-back profit warnings behind it with a double-digit dividend increase
March 8, 2013

Shares in temporary power provider Aggreko (AGK) jumped 11 per cent as investors celebrated a double-digit dividend increase and signs that trading, while subdued, had not become demonstrably worse. After back-to-back profit warnings last year, these figures contained few surprises - group trading profit was 13 per cent ahead at £388m, underpinned by £415m investment in its generator fleet to help power London's Olympics.

IC TIP: Sell at 1995p

The international power projects (IPP) division reported a marginal fall in trading profit as margins slipped from 39 to 33 per cent due to rising bad debt provisions, unusually high mobilisation costs on a contract in Mozambique and declining high-margin military and Japan contracts. Aggreko said that, although it had secured 140 megawatts (MW) of new business in Africa and Latin America so far this year, trading was likely to remain subdued in the first half. At the year-end, the division's order book was 3 per cent ahead at 37,000 MW-months.

The local business, which provides power for events such as the Olympics, saw revenue climb 23 per cent to £905m, and trading profits surged 41 per cent to £170m. Aggreko pointed to a strong start to the year, helped along by last year's Poit Energia acquisition in Brazil.

Broker Investec Securities forecasts adjusted 2013 pre-tax profits of £335m, giving EPS of 90.7p (from 101.7p last year).

AGGREKO (AGK)

ORD PRICE:1,995pMARKET VALUE:£5.4bn
TOUCH:1,996-1,998p12-MONTH HIGH:2,415pLOW: 1,548p
DIVIDEND YIELD:1.2%PE RATIO:19
NET ASSET VALUE:389p*NET DEBT:57%

Year to 31 DecTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20080.9519045.810.1
20091.0224462.712.6
20101.2330479.418.9
20111.4032497.920.8
20121.5836710423.9
% change+13+13+6+15

Ex-div: 24 Apr

Payment: 23 May