Aggreko’s (AGK) efforts to reassure investors that it’s on the right path to recovery continue to be undermined by pricing pressures on legacy contracts in Argentina. Chief executive Chris Weston was keen to point out that the temporary power supplier is now a “stabilised” business providing an “enhanced” servicing offer to match the everyday needs of customers. Yet the group’s guidance for pre-tax profit “in line with last year” suggests that Aggreko still faces an uphill battle.
Encouragingly, Aggreko did manage to return to revenue growth in 2017. Turnover, excluding currency and fuel movements, rose 4 per cent, driven by increasing demand for temporary power supply solutions after the US was rocked by hurricanes and by energy operators hiring more generators in Eurasia.
Management attributed revenue and operating profit gains across its two non-Argentina-exposed divisions, rental solutions and power solutions industrials, to its business priorities strategy. Nearly three years after first implementing the programme designed to generate cost savings, increase its understanding of customer needs and improve the quality of earnings, Aggreko now believes it has a much better grip on its competitive end markets.
Peel Hunt expects 2019 pre-tax profits of £182m, giving EPS of 50.1p (down from £198.9m and 55.5p in 2017).
| AGGREKO (AGK) | ||||
| ORD PRICE: | 709p | MARKET VALUE: | £1.82bn | |
| TOUCH: | 706-709p | 12-MONTH HIGH: | 1,061p | LOW: 639p |
| DIVIDEND YIELD: | 3.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 514p | NET DEBT: | 50% | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 1.60 | 333 | 92.2 | 26.30 |
| 2014 | 1.58 | 289 | 82.6 | 27.12 |
| 2015 | 1.56 | 226 | 63.5 | 27.12 |
| 2016 | 1.52 | 172 | 48.9 | 27.12 |
| 2017 | 1.73 | 154 | 41.5 | 27.12 |
| % change | +14 | -10 | -15 | - |
| Ex-div: | 19 Apr | |||
| Payment: | 22 May |
