Aggreko Plc (LON:AGK), today announced 3rd Quarter Trading update.
This trading update covers the period from 1 January 2018 to 30 September 2018. Unless otherwise stated, figures quoted in this statement are for the nine months ended 30 September 2018.
Underlying Group revenue up 11%
Underlying Group revenue (excluding the impact of currency and pass-through fuel) for the nine months ended 30 September was up 11% on last year, with reported revenue up 7%.
Business unit performance
Rental Solutions (52% of Group) underlying revenue up 26%
Rental Solutions underlying revenue increased 26% on the prior year and 24% excluding hurricane-related work in North America.
In North America revenue was up 32% and reflected particularly strong growth in oil & gas as we have continued to see a recovery in this sector from the prior year levels. Excluding the impact of hurricane-related work, which continued from last year through the first half of 2018, revenue was up 27%. Our Continental Europe business had a good nine months with growth in most countries, most notably the Netherlands and Belgium, as well as benefiting from the Ryder Cup in France in September. Our Northern Europe business has also delivered good growth, driven by our Next Generation Gas contracts in Ireland and an increase in activity in the oil & gas sector, as well as revenue from the Glasgow Games. Finally, our Australia Pacific business has seen increased activity in the mining sector and also benefited this year from a 100 MW contract delivering emergency power in Melbourne during its summer.
Power Solutions Industrial (27% of Group) underlying revenue up 11%
Power Solutions Industrial underlying revenue was up 11% in the period. This year’s performance was supported by the South Korea Winter Olympics, excluding which underlying revenue was up 2%. We have performed well in Latin America and in Eurasia, with the latter driven by growth in its key sector of oil & gas. Market conditions in the Middle East continue to be challenging as a result of the impact of the Qatar blockade, and underlying revenue in Africa is also down on the prior year.
Power Solutions Utility (21% of Group) underlying revenue down 14%
Power Solutions Utility underlying revenue declined 14%, as expected, reflecting lower rates and volume in Argentina and the continuing effect of the off-hires in Zimbabwe, Bangladesh and Japan.
The overall revenue reduction in this business is primarily driven by lower volumes, with year-to-date average megawatts on hire down 15% at 2,691 MW (2017: 3,169 MW), reflecting an increased year-to-date off-hire rate of 35% (2017: 25%). We expect the full year off-hire rate to be around 40%.
Outlook
We remain on track to deliver our guidance of full year profit before tax in line with 2017, excluding the effects of currency.
In terms of the Aggreko cash performance, we expect to achieve a small working capital inflow in the second half and our fleet capital expenditure is now expected to be around £200 million (2017: £246m), as we continue to focus on improving our asset utilisation. The Group’s financial position remains strong and we continue to expect year end net debt/EBITDA of between 1.2 and 1.3 times.
