The challenges faced by equipment rental company Aggreko’s (AGK) Argentinian business are continuing to weigh heavily on the group, prompting management to caveat growth predictions for the full year with “Argentina aside”. If you strip out the impact of this locale from the six months to 30 June, revenue was up 6 per cent. The profit numbers were slightly ahead of the consensus, although operating profit before exceptional items was still down 11 per cent in constant currency to £79m. And the group can't shrug off its challenges in Argentina, as Latin America counts for 19 per cent of revenue, higher than any geography except North America.
Performance across the group in general was mixed. Operating profit was up considerably at both the rental solutions and industrial power solutions divisions, by 36 and 134 per cent, respectively. However, a 33 per cent drop in the contribution from the dominant utility power solutions business negated any impact they might have had on the overall bottom line. Utility power solutions saw a sharp drop in the order intake for the year to date, to merely 430 megawatts (MW) compared with 875MW for the same period last year. On the plus side, the off-hire rate - the proportion of time equipment is not being rented and so not generating income - fell to 15 per cent from 20 per cent.
Analysts at Stifel are forecasting a drop in adjusted pre tax profit to £203.6m, giving EPS of 57p for the year to December 2017 (from £221m and 61.9p in FY2016).
| AGGREKO (AGK) | ||||
| ORD PRICE: | 864p | MARKET VALUE: | £2.21bn | |
| TOUCH: | 862.5-864p | 12-MONTH HIGH: | 1,273p | LOW: 751p |
| DIVIDEND YIELD: | 3.1% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 512p | NET DEBT: | 52% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 685 | 61.0 | 16.8 | 9.38 |
| 2017 | 792 | 53.0 | 15.0 | 9.38 |
| % change | +16 | -13 | -11 | |
| Ex-div: | 7 Sep | |||
| Payment: | 6 Oct |
