Aggreko 's (AGK) shares powered down 13 per cent on these results, making them the FTSE All-Share's biggest loser on the day. A strong run since the start of the year had left room for profit taking, but results were more downbeat than the bulls were hoping for.
Underlying operating profit fell to £77m from £114m in last year's first half. That gave a margin of 11 per cent, down from 15 per cent. The temporary power group cited a tough economic backdrop, with particular softness in North American oil and gas markets. Rental revenue fell by a fifth in the region, dragging trading profit at the rental solutions division 71 per cent lower to £10m.
The power solutions division - which serves emerging markets - fared better, with underlying trading profit just 7 per cent lower at £67m. And, pleasingly, orders for utility-type power plants nearly doubled to 875 megawatts. But the risky nature of operating in emerging markets was made clear with a $17m (£12.3m) increase in bad debt provisions.
Aggreko is sticking to full-year guidance for only a slight drop in underlying pre-tax profit. But making good on that guidance rests on key contract extensions and a seasonal pick-up in North America. Broker Peel Hunt forecasts full-year pre-tax profit of £250m, giving EPS of 69.8p (from £252m and 71.7p in 2015).
AGGREKO (AGK) | ||||
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ORD PRICE: | 1,067p | MARKET VALUE: | £2.73bn | |
TOUCH: | 1,067-1,070p | 12-MONTH HIGH: | 1,305p | LOW: 763p |
DIVIDEND YIELD: | 2.5% | PE RATIO: | 21 | |
NET ASSET VALUE: | 488p | NET DEBT: | 51% |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2015 | 781 | 102 | 29.7 | 9.38 |
2016 | 685 | 61 | 16.8 | 9.38 |
% change | -12 | -40 | -43 | - |
Ex-div: 1 Sep Payment: 30 Sep |