By Kristy Dorsey
Shares in Aggreko closed firmly higher yesterday after the company said it expects profits for 2020 to be “slightly ahead” of the top end of its own recent guidance.
In a short trading update, the Glasgow-based provider of temporary equipment used to power events such as the Olympic Games and the Glastonbury Festival said the pre-tax figure would come in above previous guidance of £80-£100 million. Aggreko made a pre-tax profit of £199m in 2019, so the new guidance indicates a year-on-year fall of approximately 50%.
The FTSE 250 firm, which also supplies equipment to a range of industrial sectors around the world, said the upgraded forecast followed “continued recovery in activity levels” across a number of markets. In addition to higher-than-expected profits, the firm said it had also cut its net debt by approximately £200m.
Tokyo Games deal now worth $315m to Glasgow power giant
The trading statement comes after Aggreko revealed earlier this month that it has agreed revised terms to its deal to provide power to the Tokyo Olympic and Paralympic Games, which have been rescheduled to take place in July and August.
The contract is now expected to have a revenue value of approximately $315m (£231m) to Aggreko, up from an estimate of $250m in April of last year. The latest revision reflects the impact of the Games’ delay from the original 2020 schedule, including costs incurred by Aggreko from providing warehouses, offices and apartments for staff in Japan.
Looking ahead, the company maintained its guidance for a pre-tax profit in the range of £170m to £190m for 2021. This was despite the recent strengthening of the pound, which suppresses the value of revenues and profits generated in foreign currencies after they are translated back into sterling.
Aggreko unveils multi-million pound blueprint for Dumbarton campus
Aggreko is in the early stages of a £4.5m upgrade to its production facilities in Dumbarton, which will bring 300 employees across three locations together on a single campus at its existing site at Lomondgate Park. The investment is part of plans for Aggreko to become net zero in carbon emissions from its own operations by 2030.
Aggreko is due to announce its full-year results for 2020 on March 1. The company’s shares closed yesterday’s trading 35p higher at 674.5p, an increase of more than 5%.