Aggreko boosts CapEx as revenues top £1 billion

Aggreko is to further increase capital expenditure by £20 million to £200 million this year to expand its International Power Projects division, which now represents over 40% of revenues and almost two thirds of trading profits.

The company invested around £160 million in its fleet in 2008 and said at the end of 2009 that it would increase that to £180 million this year, but has now raised that again to £200 million.

The growth of the division has helped to offset continued weakness in Aggreko's Local businesses in North America and Europe, where revenues in the full year 2009 fell by 19.5% and 11.6%, respectively. The company said it expected continued flat ‘local' markets in 2010 while the international projects division will continue to grow.

Group revenues grew by 8.2% to £1023.9 million - the first time the company has passed the £1 billion mark - and trading profit grew by 25.9% to £252.5 million, although on a constant currency basis this profit growth reduced to 6.8%.

Profits at the international projects division grew by 69.6% to US$247.6 million on revenues up 26.2% to $661.3 million.

Philip Rogerson, Aggreko's chairman, said; "Aggreko delivered another record performance in 2009, despite the challenging economic conditions. While we remain cautious about the outlook for the Local business, we are encouraged by the strong start made by International Power Projects in 2010.

"As a consequence we are increasing our December guidance for fleet capital expenditure in 2010 by £20 million to £200 million; most of which will be invested in the International Power Projects business."

Aggreko, which has recently announced winning the temporary power contract for the World Cup in South Africa this summer, said the international power projects division started the year with nearly 10% more capacity on rent than a year ago and about 10 months of forward order cover. Since the beginning of the year it has signed contracts for 364 MW of power, including 100 MW in Panama and 115 MW in the Sultanate of Oman.

Trading in the local business remains subdued, said the company, with power volumes on rent about 4% ahead of last year, but temperature control volumes about 7% down. Aggreko said the Vancouver Olympic Games contract was going well and that it expected revenues to be around $25 million. Rates generally remain weak, said the company.