Aggreko profits fall and expected to remain flat in 2015

5th Mar 2015 07:07

After a year of senior management change and difficult conditions in some markets, Aggreko saw pre-tax profits decline 13% to £289m in the face of currency headwinds and said they looked likely to remain flat in the year ahead.Analysts had been expecting such a fall from the temporary power provider in 2014, but the lower guidance for 2015 was at the bottom end of expectations.A £40m adverse currency translation impact dragged trading profits down 13% to £306m, below consensus forecasts of £311m, with group reported margin down to 19% from 22% due to the Australian mining slowdown and a slowing economy in Brazil.The full year dividend was lifted 3% to 27.12p, well below optimistic consensus predictions.This was despite revenues rising a solid 9% to £1.58bn thanks to 8% growth at the local business as strength in the Americas and Europe, Middle East and Africa outweighed weakness in Asia Pacific from the Australia factor.The local business benefited from £19m of combined revenue from the Glasgow Commonwealth Games and FIFA World Cup in Brazil.The first two months of 2015 have been encouraging and management said that they expect underlying trading profit to be broadly in line with 2014, with little impact of lower oil prices so far but expected to drag later in the year.This represents somewhat of a downgrade, with the company having said in November it expected trading profits to be in line with 2013's higher £352m. North America customers are reportedly reducing capex plans, adding to the unclear medium term outlook.A spokesman for the company stressed that this was a broad indication given that it's still early in the year and a lot of Aggreko's business is relatively short-term.Barclays analysts said it was a "notably better" start to 2015 than they feared after bracing themselves for "a big impact from lower oil prices on the US business and weak contract flow in power projects".Berenberg said while there were some signs of recovery, the exposure to oil and gas, at 15% of group sales, might prove a drag for the local business and also cited mining markets as well as continued weakness in emerging markets as further downside risks.Aggreko's new chief executive Chris Weston, who only began in January, promised a to provide a fuller review of the business when the company reports first-half results in January.