Aggreko signals dip before surge for temporary power

Aggreko’s forecast that its annual profit could fall in 2013 spotlights concerns for the wider temporary power sector, yet 2014 could bring “explosive” growth, say analysts.

Chief Executive Rupert Soames triggered a 20 per cent slide in Aggreko shares by admitting on 17 December that “we are going to be slightly below where we were this year”. The firm’s revenue is set to slip by £100m ($160m) from 2012, he added.

Rupert Soames of Aggreko

Worryingly for the entire sector, Aggreko’s revised outlook factors in slackening demand across emerging economies, along with issues specific to key markets.

Temporary power suppliers could indeed face a bleak 2013, even if their longer term outlook is robust, said Malavika Tohani, Research Manager, Energy & Power Systems, Frost & Sullivan.

“As Aggreko holds a big share of the market around the world, it’ll have an impact on the entire sector,” she told Power Engineering International.

While downturns can boost renewal demand by deterring capital expenditure, the current economic climate is prompting companies to put projects entirely on hold, she added.

“It doesn’t help that the construction industry is also doing very badly,” she said.

Yet she flagged 2014 as “quite an explosive year in terms of growth”, with demand underpinned by a flurry of sporting events: the Winter Olympics in Russia, the Football World Cup in Brazil, the Special Olympics in Canada, and the Asia Games in South Korea.

In 2012, while Aggreko has thrived in international power projects (IPP), where it expects 15 per cent growth for the year, the developing world’s racing economic growth is set to falter next year.

Other drags on Aggreko’s sales in 2013 include troop drawdowns in Afghanistan, dwindling post-Fukushima contracts in Japan, and the end of a £59m boost from the London Olympics.

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