Developing markets fuel Aggreko revenue growth

By Murray Pollok29 August 2008

Aggreko equipment rented in Bonaire, Caribbean. The company is benefitting from the demand for power

Aggreko equipment rented in Bonaire, Caribbean. The company is benefitting from the demand for power in the world's developing regions.

Aggreko has shrugged off US and European economic problems to post a 28.4% increase revenues to £407.7 million for the first six months of the year and a rise in pre-tax profits of 41.9% to £67.9 million.

Rupert Soames, chief executive of the Glasgow-based power and temperature control rental company, said Aggreko's strong growth was the result of continued investment in its fleet and "The structural imbalance between global demand for, and the supply of, power".

Mr Soames said fleet investment - £120m in the first six months of 2008 compared to £79m in the same period last year - was helping it meet strong demand in emerging markets; "The momentum we have developed in our businesses in the Middle East, Asia, Africa and Central & South America will more than offset softer demand in North America and Europe and will enable us to deliver another very strong performance in the second half".

The company's local businesses in North America and Europe saw modest growth, but grew very strongly in Middle East, Asia, Australia, and Central & South America. Overall, Aggreko's local business revenues increased by 42%, while sales in its International Power Projects division rose by 30%. The company's order book now stands at a record 22000 MW months.

Aggreko said the uncertain business conditions in North America and Europe contrasted with the strong growth that it expects to continue in the Middle East, Africa, Asia, and Central & South America. Overall, it forecasts that the full year performance will exceed market expectations.

Aggreko's chairman, Philip Rogerson, said; "Notwithstanding the difficult market backdrop in North America and Europe, we expect these businesses to trade at similar levels to last year in the second half, which reflects the fact that we are not reliant on any one single market sector, and that we are able to shift resources between end-user segments.

"In our local businesses in the Middle East, Asia, and Central & South America we expect further strong progress, with demand unabated and our capabilities and scale growing rapidly. This progress will be sustained towards the end of the year by the return of the fleet currently being used on the Beijing Olympics contract.

"In International Power Projects we expect the rate of profits growth to accelerate, as new fleet is delivered, projects mobilised in the first half start to generate income, utilisation once again increases, and margins strengthen", said Mr Rogerson.

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