With last year benefiting from both the Commonwealth Games and Winter Olympics, 2019 was always going to be tougher for Aggreko (AGK). Indeed, a somewhat mixed bag across divisions saw underlying revenue fall by 4 per cent but improved margins pushed operating profit up 12 per cent to £81m.
Underlying revenue in the core rental solutions business was largely flat, although as better cost discipline lifted margins by 1.1 percentage points, underlying operating profit rose 12 per cent to £47m. That was despite average megawatts (MW) on hire falling by 5 per cent and a five percentage point reduction in utilisation to 56 per cent. North America remained the business's growth engine, where revenue was propelled 7 per cent higher by strong demand from the oil and gas markets.
However, underlying utility power solutions continued to disappoint. Revenue declined by 7 per cent, due to the timing of on and off-hires causing an 8 per cent reduction in average MW on hire. Trade and other receivables did improve, but payment delays from geopolitically unstable regions persisted and $84m of bad debt provision included an additional $3m set against specific contracts in Yemen.
Peel Hunt anticipates adjusted pre-tax profit of £197m and EPS of 49.5p for the full year, rising to £241m and 60.4p in 2020.
AGGREKO (AGK) | ||||
ORD PRICE: | 835p | MARKET VALUE: | £2.14bn | |
TOUCH: | 834.8-835.2p | 12-MONTH HIGH: | 891p | LOW: 690p |
DIVIDEND YIELD: | 3.2% | PE RATIO: | 17 | |
NET ASSET VALUE: | 531p* | NET DEBT: | 58% |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2018 | 857 | 59 | 15.85 | 9.38 |
2019 | 768 | 60 | 15.34 | 9.38 |
% change | -10 | +2 | -3 | - |
Ex-div: | 5 Sep | |||
Payment: | 1 Oct |