Aggreko warns of lower revenues in 2013

Temporary power and temperature control solutions group Aggreko maintained its full-year guidance in a pre-close trading update on Monday morning, but gave a gloomy outlook for next year, saying that its performance would likely be lower than the 2012.

Temporary power and temperature control solutions group Aggreko maintained its full-year guidance in a pre-close trading update on Monday morning, but gave a gloomy outlook for next year, saying that its performance would likely be lower than the 2012.

The company said that group revenues are expected to rise by 13% in 2012 to £1.6bn, while profit before tax and amortisation will be up 12% at £365m.

Underlying revenue growth in the International Power Projects division, excluding pass-through fuel and foreign exchange, is expected to be around 15% this year. However, underlying trading margins are expected to come in at 34%, lower than last year due to increased bad debt provisions and mobilisation costs on a contract in Mozambique.

In the Local business, reported revenues are forecast to rise by 24%, while underlying revenues will increase by 8% after stripping out the benefit of the London 2012 Olympics contract and the Port Energia acquisition in April.

Gloomy outlook for 2013

Looking ahead, Aggreko said that after a year of strong growth in 2012, "the economic environment we will be facing in 2013 is particularly uncertain in many of our markets and it is difficult at this stage to provide a definitive view of the likely pattern of trading in 2013."

The firm pointed out that the Olympics contract was just a one-off contract, while it will be hit by the planned reduction in numbers of US troops in Afghanistan which will lead to a further reduction in Military revenues. Meanwhile, it is waiting on a Japanese client to see whether it wants to extend its contracts into the second half of 2013.

Revenues from these three issues combined will dent the top line by £100m in 2013, the group said.

"Notwithstanding the difficult economic environment, and excluding the impact of the three items mentioned above, we expect both the International Power Projects and Local businesses to grow in 2013.

"However, this growth will be unlikely to be able to mitigate entirely the reduction of £100m of revenue and associated margin, and on a reported basis we currently believe that group performance in 2013 is likely to be slightly lower than in 2012."

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