International power projects sustain Aggreko growth
By Murray Pollok12 December 2008
In its trading statement for the full year to 31 December, Aggreko said both its North American and European businesses had been more resilient than it had expected in the face of the economic downturn, "but it is unlikely that they will be able to defy the economic headwinds indefinitely. However, we expect that International Power Projects, which will enter 2009 with over 30% more capacity on rent than at the start of 2008, will perform strongly in the first half, and that it will more than offset any weakness in the local businesses."
Revenues in the final quarter of the year will be around 48% higher than in 2007, although that drops to 28% when the impact of currency and fuel are stripped out. The international power projects division will grow by around 51% with its local businesses increasing by 18%, excluding exchange rate changes. It expects pre-tax profit to be up 53% at £190 million, "slightly ahead of market expectations".
Aggreko said its local businesses had performed well in the quarter: in North America, revenue from storms continued into the fourth quarter and it reported strong growth in its cooling tower business. Revenues in Europe were at similar levels to 2007, but were well ahead of the previous year in the Middle East, Australia and Central & South America.
The company said it would invest £260 million in fleet capital expenditure this year, with that falling to around £170 million in 2009 - the same level as 2007.
Meanwhile, Aggreko announced in October that it will invest £20 million in a new manufacturing facility in Dumbarton, Scotland, near to its existing facility at Birch Road, Dumbarton and its corporate headquarters in Glasgow.
Most of Aggreko's generators are designed and built in Dumbarton, but the company said that rapid growth over the past five years meant it needed additional capacity. The company said it considered several sites, including China, but concluded that Scotland was the most cost-effective location.
Rupert Soames, chief executive of Aggreko, said "we are all absolutely delighted that we were able to make the sums add up for this major investment, in part due to assistance from the Scottish Government. Over recent years we have built up world-leading design, engineering and manufacturing skills in Dumbarton, and employ over 250 people there. By building our new facility in the same area, we will keep this team together, and, hopefully, will be able to expand it." The new facility is scheduled to be opened in 2011.