Aggreko encouraged by market recovery
By Murray Pollok02 March 2021
Aggreko has reported a 14% fall in revenues to £1.36 billion for the year to 31 December, with pre-tax losses of £73 million, including £175 million in exceptional costs.
The exceptional costs include £67 million for trade receivables (money owed to the business), mainly related to its larger utility power contracts, and £55 million for plant and equipment, focused on under-utilised assets or fleet that cannot be economically repaired or refurbished.
A further £36 million impairment has been made on its fleet, reflecting likely lower demand because of Covid and its economic consequences.
The company is currently subject to a takeover bid by a consortium of private equity firms.
All three of the company’s divisions were impacted by the pandemic, particularly its rental solutions business, where revenues were down 16% to £693 million.
The industrial power division posted revenues of £362 million, a fall of 13%, while its power utilities business reported bn 11% drop in revenues to £265 million, driven by off-hires and delays in mobilising contracts.
Aggreko said it was encouraged by the recovery it was seeing in its markets, despite economic uncertainty. Major delayed contracts are now being mobilised, it said, and the rental solutions business was seeing “good recovery in a number of our key sectors”.
Chris Weston, CEO, said; “We enter 2021 well positioned for the recovery which we are seeing in our markets and this momentum supports our confidence in the business going forward.
“We have also set out our strategy for the energy transition, providing industry-leading commitments to be net zero by 2050, while achieving profitable growth and mid-teens ROCE in the medium-term.
“We are pleased with our progress in the transition to date, recently winning a solar-hybrid contract for a mine in Chile, and starting work on upgrading our Dumbarton facility into a hub for our net-zero initiatives.”
Aggreko said Brexit had not resulted in any major disruption, although shipments between the UK and the EU are slower. The company is in the process of dual marking its products with both the CE and the new UK Conformity Assessed (UKCA) marks. Aggreko generates 5% of its revenues in the UK and 10% in the EU.