18 December 2009
Aggreko plc, the world leader in the provision of temporary power and temperature control solutions, is today issuing the following trading update for the year ending 31 December 2009.
Trading in the fourth quarter has been better than we anticipated, driven by a strong performance in International Power Projects.
We now expect that Group revenue for the year will be slightly over £1 billion, and operating profit will be around £260 million. On a headline basis revenues are expected to be up 7% and operating profit up 27%; we anticipate that earnings per share will increase by at least 33%.
2009 will be a 53-week financial year, and will therefore benefit from an additional week’s trading. In constant currency, excluding pass-through fuel, and adjusted for the impact of the 53rd week, revenues for the year are expected to be down 5% and operating profit up 4%.
We expect to generate net cash inflow of around £160 million in the year, and we anticipate that net debt at 31 December 2009 will be around £180 million, against £364 million at 31 December 2008.
In the fourth quarter, the International Power Projects business has continued to trade strongly. We expect revenue in the fourth quarter in constant currency, excluding fuel and adjusted for the 53rd week, to be up 8%. Trading margins have remained strong. There was a sharp increase in the number of new megawatts (MW) put on hire, and we will probably just beat our previous record of delivering 300 MW of new capacity in a single quarter, although this will be partly offset by a higher off-hire rate as about 100 MW of summer peaking capacity in Saudi Arabia comes to the end of its contract.
Our Local businesses have continued to trade in line with the pattern seen in the third quarter. We expect revenue in the fourth quarter, in constant currency and adjusted for the 53rd week, to be down about 21%. Rates have continued to be weak, and all areas other than the Middle East, Russia and China have seen lower revenues. The sharpest declines in both rate and volume have been in temperature control; volumes in power rental have remained robust and are only slightly down on the prior year. As a result of effective management of costs, trading margins in the Local business have been resilient, and in aggregate are expected to be only a few percentage points below the level achieved in the same period last year.
Looking ahead to next year, and allowing for the impact of the 53rd week in 2009, we expect that the Group will make further progress on a constant currency basis. Activity levels in International Power Projects are encouraging, and we expect to start the year with about 10% more MW on rent than we had a year ago. In the Local business, it is difficult to predict the timing or extent of any underlying improvement, although we expect that 2010 will be a strong year for major events, starting with the Winter Olympics in Vancouver, for which we are the official supplier of power and temperature control. Outside of major events, all we can say at this stage is that conditions are getting no worse and we are hopeful that we will start to see some improvement in the coming year.
In terms of capital expenditure, we expect to continue to expand our fleet. We currently plan to spend around £180 million on new fleet in 2010, £30m more than in 2009, and about 1.2 times fleet depreciation. However, our ability to adjust capital spending rapidly is an important feature of our business model, and we will manage the rate of fleet investment through the course of the year in the light of demand.
Preliminary Results will be announced on 4 March 2010.