A slowdown in the North American oil and gas sector, lower than expected pricing on a Bangladesh contract extension and lower production levels in Yemen due to ongoing security challenges have impacted UK-based power rentals company Aggreko. The group notes power projects revenue was down 9%, on the previous year.
The company has revealed plans for a new organisational structure, creating two separate business units - Power Solutions and Rental Solutions - effective from 1 August. In a statement Aggreko says that 2016 will be a year of change in the business with markets remaining difficult; margins and returns are likely to be lower in the short term.
Commenting on the results Fiona Cincotta, a senior market analyst at www.finspreads.com, said: ‘Aggreko had previously warned of falling profits and they certainly didn´t disappoint there.
‘Chief executive Chris Weston also unveiled a massive cost cutting drive involving the shedding of 600 jobs. He has already shaken up the structure of Aggreko and now looks to improve skills across the company in order to deliver more complex projects in addition to improving its technology to reduce costs for customers.
‘These are a big set of plans for the company and Aggreko remains a strong firm in a sector which still has potential for growth. However weaker oil and gas markets in North America and ongoing security problems in Yemen mean that near term head winds remain strong and difficult markets are expected well into 2016.’