Aggreko powers on, increases investment in fleet - UPDATE

9th Mar 2012 07:16

The share price of Aggreko shows no signs of cooling down as it hit a new all-time high following another strong set of results from the temperature control solutions provider.Group revenue rose to £1,396m in 2011 from £1,230m in 2010; that's a 14% increase, but when adjustments are made for currency movements, pass-through fuel and major sporting events such as the World Cup and the Winter Olympics, the underlying rise was 22%.Adjusted profit before tax climbed 6% to £327m from £307m the year before, a shade above market expectations of £325m.The International Power Projects business was the star performer. Revenue rose by an underlying 25% to $888m in 2011 from $712m in 2010, while trading profit rose an underlying 33% to $344m from $260m the year before.What Aggreko calls its International Local business unit also had a stonking year, with underlying revenues up 37% and trading profit up an underlying 29%, though the actual figures (i.e. on a non-underlying business) fell, to £173m from £188m (revenue) and to £31m from £56m (trading profit)."The business has had a strong start to the year and the growth rate in both International Power Projects and the Local business has accelerated," revealed Rupert Soames, Chief Executive of Aggreko.Encouraged by this, the group is planning to increase the rate of investment in its fleet; it now expects fleet capital expenditure in 2012 to be around £350m, £30m more than management anticipated at the end of December 2011.Net debt at the end of 2011 stood at £365m was £232m higher than at the end of 2010, mainly as a result of the increase in capital expenditure and the £148m return of capital to shareholders.Diluted earnings per share (EPS) before a £29m exceptional tax credit4 increased by 10% to 86.76 pence (2010: 78.98 pence). The dividend has been hiked by one-tenth to 20.79p from 18.90p the year before."We are We are confident that the business will deliver strong growth in the first half of 2012; at this early stage of the year, we are more cautious about the second half of 2012, when, in any case, comparatives will be tougher. Overall we continue to believe that we will deliver another year of good growth in 2012," Soames added.Broker Peel Hunt said the figures were in line with expectations, and because the increase in expenditure suggests a slightly more confident outlook than previously it is nudging up its 2012 earnings per share forecast by 5% to 103.3p."Ahead of the [analysts] meeting, we anticipate upgrading our Dec 2012PBT [profit before tax] from £352m to £370m (consensus £362m) to give EPS of 103.3p from 98.3p (+5%)," said Peel Hunt analyst Andrew Nussey.Peel Hunt rates the shares as a "hold" and has a 2200p price target.The shares hit a new high of 2,312p on the day the figures were announced. jh