14th May 2015 07:07
LONDON (Alliance News) - Aggreko PLC Thursday retained its 2015 guidance as it cautioned that it can't predict the impact of the lower oil prices on its markets, even though revenue rose 8% in the first quarter of the year as it got a boost from the stronger dollar and as growth in the Americas and Europe, Middle East and Africa offset a decline in Asia Pacific and Australia.
The temporary power provider said it still expects its 2015 trading profit excluding currency movements and pass-through fuel to be broadly in line with 2014, even though its revenue on the same basis rose 4% in the first quarter of the year and total revenue rose 8%.
It said underlying revenue was up 7% in the Americas in the quarter, driven by its power projects business and the work it is doing in Panama. In EMEA, underlying revenue grew 10%, thanks to 14% growth in power projects after strong order intake in 2014, and 6% growth in its local business driven by growth in Africa and initial revenue from the European Games in Baku.
However, underlying revenue in Asia Pacific and Australia fell 13% as its power projects business revenue dropped 20% due to lower hire volumes in Indonesia. Local business revenue was down slightly as Australia continued to decline, albeit at a slower rate, while New Zealand and South Korea grew strongly.
"As we look forward, we expect growth to improve in the Local business, but it remains unclear what the full year impact of a lower oil price will be across all our markets," Aggreko said.
"In Power Projects, year to date order intake is solid and we are making progress on key contract extensions. However, external market conditions remain difficult in a number of our markets, in particular the security challenges in Libya and Yemen," it added.
Its local business in the Americas reported flat underlying revenue in the first quarter, although North American oil and gas revenue was up 6%. However, this was offset by a slow start in the northeast of the US due to the harsh winter, lower activity in its Cooling Towers business, as well as its Chilean business, which was hit by the slowdown in mining.
"Towards the end of the quarter we started to see a decline in volumes and pricing in our shale oil business; this is being partially offset by growth in other sectors, particularly petrochemical and refining," it said of the oil and gas business.
Aggreko said it expects fleet capital expenditure to be about GBP300 million for the full year, with GBP140 million now expected in the first half of the year due to planned investment in the gas fleet.
"As we have said in the past, our model allows us to flex this number up and down, and we will continue to do this based on the opportunities that we see in front of us," it said.
"Overall, as indicated in the March results announcement, underlying trading profit for the first half is expected to be lower than last year, principally due to higher mobilisation costs, with underlying trading profit for the full year being broadly in line with last year," Aggreko said.
By Steve McGrath; [email protected]; @stevemcgrath1
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