Aggreko Plc shares fell the most since Dec. 2012 after the power-generator supplier said conflict in Yemen, an accelerated slowdown in the U.S. shale gas market and a lower-priced contract would cut profit over the next two years.
The Glasgow-based company fell as much as 20 percent at the market open and was trading down 15 percent at 1,213 pence per share at 08:53 a.m. in London. Pretax profit this year will be as much as 15 percent lower than previous guidance of 293 million pounds ($453 million), falling to between 250 million pounds and 270 million pounds, the company said in a statement Friday.
Chief Executive Officer Chris Weston, who took the post in January, has been battling to manage the effects of the war in Yemen on the company’s power-generation operations there, as well as pressure on shale gas production after oil prices plummeted last year.
The company, which gave guidance on the impact of the shale slowdown in the Gulf of Mexico in May, said a worse-than-anticipated decline in production would weigh more heavily on full-year earnings. Lower pricing terms in extensions to an existing power-supply contract in Bangladesh -- which will impact from the second half of this year -- will be “less favorable than our earlier expectations,” Aggreko said.
“While we will be seeking to mitigate the profit impact by reducing operating costs, there will be a net adverse impact on profits this year and in 2016,” it said.
Oil and gas-related business accounts for about 17 percent of Aggreko’s revenue, with its largest operations based in the North American shale market.