Poor summer weather dents Aggreko results

A slump in demand for temperature control equipment in North America and Europe dented Aggreko's results in the first half of 2009, although continued growth of its international power projects helped the company increase its revenues and profits in the period.

Aggreko said that low temperatures during the summer season in North America and Europe, as well as less demand for chillers from the depressed manufacturing sector, had dampened demand for its temperature control equipment in the period. Revenues for temperature control equipment in Europe fell by 25% and in North America by 21%.

This contributed to an overall 13% fall in the company's local rental business, with profits down 29%. European ‘local' revenues fell 16% to £79.5 million and trading profits halved to £4.9 million, while in North America sales fell 11.1% to $140.0 million and trading profits were down 30% at $16.1 million.

Aggreko said it has more power on rent in its local businesses in the six month period, but rates were "noticeably weaker".

However, total group revenues were up 5% (in constant currency) to £499.8 million and trading profits rose 14% (constant currency) to £107.0 million, fueled by a 40% increase in international power project revenues to $313.0 million and a 72% rise in its trading profits to $104.3 million.

Rupert Soames, Aggreko's chief executive, said he expected conditions in local businesses to continue to be challenging; "We have deliberately sought to defend and, where possible, increase our market share and we currently have more power on rent in our local businesses than we did a year ago.

"However in achieving this, rates have weakened noticeably. Our temperature control business is having a poor summer season in both North America and Europe, with low ambient temperatures and few customers suffering the capacity constraints which drive demand for additional cooling. Our response to this challenging environment has been to restrict new fleet investment and to reduce headcount in our worst-affected Local businesses."

Philip Rogerson, Aggreko's chairman, said Aggreko had delivered "another strong performance, despite the difficult economic conditions, producing increased trading margins and returns on capital employed."