Aggreko sees the draining effect of an Olympics void

THE firm that supplied power to the Olympics and Paralympics has warned it will struggle to fill the London 2012 void next year.

Aggreko shares plunged 17 per cent as it is unlikely to fully mitigate against the £59m London 2012 contract in 2013, as well as the loss of military revenues as US troops withdraw from Afghanistan and the possibility that some Japanese clients will not renew their contracts.

Hide Ad
Hide Ad

“We have got a double whammy going into next year,” chief executive Rupert Soames said.

“We have got a weakening demand environment in terms of our power projects business... the other whammy going on is that we have got about £100m of revenue ... that is not going to recur in 2013.”

It is the second warning from Aggreko in as many months after it said in October that unfavourable currency movements and an increase in bad debt provisions would affect results for this year.

Hide Ad
Hide Ad

With Aggreko missing out on £100m of repeat revenues, it said yesterday its performance for 2013 was likely to be slightly lower than this year.

Having been one of the fastest growing stocks in the FTSE 100 Index, Aggreko’s shares are now back where they started 2012.

The Glasgow-based group, which has also provided power generation and temperature control systems at events such as the football World Cup and US Superbowl, expects to increase revenues by 12 per cent to £1.6bn this year.

Hide Ad
Hide Ad

Underlying profits should be around 12 per cent higher at £365m, with revenues from its local division, which handled the Olympics, up 24 per cent.

Paul Jones, analyst at Panmure Gordon, said: “With military work coming off, Japanese renewals not expected, and the year-on-year effect of the Olympics, we now expect 2013 to be below 2012 – something not seen at Aggreko for some time.”

But Caroline de La Soujeole, analyst at Seymour Pierce, said Aggreko was a well-managed, quality business and underlying drivers in developing countries remained strong.