Aggreko Drops Most in Seven Months on Outlook for Order Intake
Aggreko Plc, (AGK) the world’s largest provider of mobile power generators, fell by the most in seven months after saying the pace of orders at its Power Projects division probably won’t pick up in the “immediate future.”
The shares declined by as much as 7.9 percent, the most since Dec. 17, 2012, making it the worst peformer on the FTSE 100 Index. The stock traded 6.6 percent lower at 1,662 pence at 1:30 p.m. in London. Trading volume was twice the three-month daily average.
First-half sales in the Power Projects division, which accounts for about 40 percent of revenue, were little changed at $482 million, the company said today in a statement. Underlying profit from the division declined 8 percent to $147 million.
“The group has quoted a record number of proposals in Power Projects in the first half, but conversion rates to contracts has disappointed,” wrote analysts including Hector Forsythe at Oriel Securities in London. “We are putting our recommendation under review to take our rating to hold.”
Investors wiped $2 billion off Aggreko’s market value last December after saying earnings would be “slightly lower” in 2013 because of slowing demand in emerging markets. First-half underlying revenue fell 6 percent in the Asia Pacific region, the Glasgow, Scotland-based company said in today’s statement.
Sales rose 4 percent to 760 million pounds helped by an 11 percent increase in underlying growth in the Americas.
The company said while the prospects for power projects remain healthy it doesn’t “expect a pick-up in the rate of order intake” for the business in the “immediate future.”
“This reinforces our view that profits will be down in the second half and first half of 2014,” wrote Andrew Ripper, an analyst at Bank of America Merrill Lynch in London, in a note to clients.
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