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Aggreko PLC AGK Interim Management Statement

  Aggreko PLC (AGK) - Interim Management Statement

RNS Number : 0734P
Aggreko PLC
19 October 2012






                                                               19 October 2012

                                      

                                 Aggreko plc

                                      

                         INTERIM MANAGEMENT STATEMENT



Aggreko plc, the world leader in the supply of temporary power and temperature
control, is today issuing its Interim Management Statement covering the period
from 1 July 2012 to date.



Trading



As a result  of strong  trading in  the Local  businesses, and  helped by  the 
London 2012 Olympics, Aggreko has delivered a robust performance in the  third 
quarter, and trading at a Group level has been in line with our expectations.
On a reported basis,  revenues grew by 22%,  whilst on an underlying(1)  basis 
revenues grew by 13%.



International Power Projects' business revenues in the third quarter grew  15% 
excluding pass-through fuel and currency  movements.Order intake in the  third 
quarter was below last year  at 115 MW, but shortly  after the quarter end  we 
signed two contracts including a second  contract for 74 MW with the  Hokkaido 
Electric Company in Japan, which  takes year to date  order intake to 870  MW; 
this compares with  944 MW  at the  same point in  2011. When  this plant  is 
commissioned, we will have more  than 240 MW on rent  in Japan, which is  more 
than in the immediate post-tsunami period. Capacity on hire at the end of the
quarter was 17% ahead  of the prior  year. Trading margin  in the quarter  in 
International Power Projects  has been  lower than  last year,  in large  part 
because of the unusually  high mobilisation costs  relating to the  Mozambique 
contract; we also  increased further our  bad debt provision  in the  quarter, 
which, set against  a large  release in the  third quarter  of 2011  depressed 
margins relative to the prior year.



The Local business delivered a  better-than-expected performance in the  third 
quarter, with revenues on a reported  basis growing by 32%. On an  underlying 
basis, revenues grew by  11% in the third  quarter; within this North  America 
grew by 13%;  Europe &  Middle East grew  by 8%;  and Aggreko  International's 
Local business grew by 13%. Both  underlying and reported trading margins  in 
the Local business were higher in the third quarter than in the prior year. We
have finalised the value of the London 2012 Olympics contract at £59  million, 
and we  are all  proud of  the excellent  performance of  our events  team  in 
faultlessly delivering this demanding contract.



Financial position



Net debt at £685 million has increased by £7 million in the three months to 30
September 2012.This compares  to net  debt of  £424 million  at 30  September 
2011; the £261 million year-on-year increase is largely due to the acquisition
of Poit Energia,  and higher levels  of both capital  expenditure and  working 
capital.



Poit Energia deferred consideration



The Poit Energia acquisition  included a deferred consideration  of up to  £20 
million, payable if stretching performance targets for the calendar year  2012 
were met. Having completed  the acquisition earlier  than we anticipated,  it 
now makes  sense to  integrate the  two businesses  as soon  as possible,  and 
accordingly we have agreed  with the Vendors that  we will terminate the  earn 
out period early in  return for a  payment of £3 million  of the possible  £20 
million. The  £17 million  release  of the  deferred consideration  from  the 
balance sheet will be treated as an exceptional credit in the full year income
statement, which will be  partially offset by  Poit Energia integration  costs 
and re-organisation  costs related  to  the implementation  of the  new  Group 
structure.



Outlook



Having had a strong third quarter we now expect the Local business will have a
better second half than  we previously anticipated,  supported both by  better 
base business  performance  and additional  work  from the  London  Olympics. 
Margins for the Local  business on both an  underlying and reported basis  are 
forecast to be better than last year for the full year.



International Power Projects  will have  a strong year,  although second  half 
revenue growth rates will be  slightly lower than we  expected at the time  of 
our Interim Results. Margins and returns for the year will be lower than 2011
due to the high mobilisation costs in  Mozambique and the increase in our  bad 
debt provision, with our current assumption being that we will not be able  to 
reduce the level of provisions held before the year end.



Overall, trading  continues to  run broadly  in line  with our  expectations. 
Despite the increase in bad debt provisions during the year and unusually high
mobilisation costs, we expect that Group margins for the year as a whole, both
on a reported and underlying basis, will  be at similar levels to last  year. 
Since our last trading  update in early August,  however, exchange rates  have 
moved against  us, and  we have  also increased  our bad  debt provisions;  we 
expect that,  between them,  these  two factors  will impact  our  anticipated 
profits for the year by about 2.5%.



Looking ahead,  we  expect  to  spend about  £415  million  on  fleet  capital 
expenditure in the current year. However,  given the need to absorb into  the 
wider business the fleet we built in  the first half for the London  Olympics, 
and  being  mindful  also  of  a  weakening  macro-economic  outlook  in  many 
developing economies, the rate of fleet capital expenditure in the first  half 
of 2013 is likely to be lower than in 2012.



There will be a conference call  for analysts and investors at 8.30am  today. 
For dial-in  details,  please  contact  Sian  Stanley  on  020  7379  5151  or 
sstanley@maitland.co.uk.



                                   - ENDS -



Enquiries to:

Rupert Soames / Angus Cockburn

Aggreko plc

Tel. 0141 225 5900



Neil Bennett / Tom Eckersley

Maitland

Tel: 020 7379 5151









(1) Underlying revenue excludes revenue from major events (Asian Games in 2011
and London Olympics in 2012), Poit Energiaacquisition, pass-through fuel and
currency movements.



                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


IMSEASENFLXAFEF -0- Oct/19/2012 06:00 GMT
 
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