Aggreko has issued its trading figures for 2010 with better-than-expected results for its local business segment and a sharp drop in the off-hire rate in the international power projects but with plans to invest nearly US$100 million in growing its fleet of power generation and temperature control equipment worldwide.
The company expects that reported overall revenues for the year will be in the region of US$1.9 billion – an increase of 20% over the same time last year, and before-tax profits are likely to be around $474 million (up 25%). The underlying growth in revenue and trading profit for the year is expected to be around 11%.
Aggreko expects to end the year with net debt of around $225 million – a reduction of $47 million over the course of the year. This is in spite of the company’s record levels of capital expenditure and the recently announced acquisition of Northland Power Services for about $23 million.
Fleet capital expenditure in 2010 will be around $404 million, which is about 1.8 times fleet depreciation.
Trading in international power projects improved in the fourth quarter with the order-intake secured in the first half now generating revenue, however the fourth quarter also saw a much reduced off-hire rate. Underlying trading margins in International Power Projects have remained strong in the fourth quarter and for the full year are anticipated to be broadly similar to 2009.
Aggreko says that its revenues for the quarter would be around 20% higher than 2009 with the Middle East and Europe sectors of its operations experiencing a 10% growth and expects trading margins in its local business segment to show year-on-year improvement.
Major events give profits boost
Aggreko’s 2010 trading figures are further boosted by its involvement in supplying its services for three major sporting events this year – the FIFA World Cup, the Winter Olympics and the Asian Games. Together these events accounted for around $140 million of revenue for the company in 2010, however the company said these profits have not been used in the calculation of the overall revenue and profit figures for this year as there will be no events of comparable size. However the company expects a similar level of trading profit in 2011.
Fleet capital expenditure
“In terms of capital expenditure, we plan to continue to invest heavily in our fleet. We currently expect to spend around £320 million (US$497 million) on new fleet in 2011, £60 million ($93 million) more than in 2010, and about 1.7 times fleet depreciation. This expenditure reflects both an increase in fleet capacity, and a higher proportion of the investment accounted for by gas fleet, which is about twice the cost per megawatt of diesel fleet,” the official statement from the company read.
The company plans to continue upgrading its North American fleet to the latest emissions standards as well as investing in fleet for its new service centres in Asia and South America. It said that it would manage the rate of investment over the next year depending on demand.
