Aggreko's half-year profits slide on weak trading of Power Projects

1st Aug 2013 07:14

Aggreko, which supplies temporary power and temperature control, reported a two per cent drop in pre-tax profits to 144m pounds for the first six months due to poor trading its in Power Projects business.The Power Projects division's flat revenues and weak margins dragged down the group's overall performance, Aggreko said. A lower level of diesel fleet utilisation and higher than normal mobilisation costs from the 222MW of gas plants recently commissioned in Mozambique and Cote d'Ivoire were partly to blame for the unit's slump.It prompted the company to reduce the rate of capital expenditure in its rental fleet within the Power Projects business.Aggreko spent £111m on new fleet in the period, compared to £220m last year, equivalent to 87% of the depreciation charge. As a result, net debt fell to £552m at June 30th, £126m lower than the same period last year.Despite the weak performance of the unit, group revenue was up 4.0% to £760m, driven by Local business which delivered revenue growth and strong margins. The division represented 60% of revenues.The interim dividend was increased by 10% to 9.11p per share as cash inflow came to £69m in the second half. The firm expects cash inflow to rise to around £100 in the second half. "We expect revenues in Power Projects to be higher in the second half than in the first, as increased revenues from our gas projects offset reduced revenues from Military and Japan," insisted Rupert Soames, Chief Executive."On an underlying basis we expect that the Local business will continue to perform well in the second half with margins anticipated to improve year on year, in part reflecting the growth in mini power projects. "As a result of our disciplined approach to capital expenditure, we also expect to deliver strong cash generation in the second half."RD