Aggreko shares soared to a new high yesterday as it predicted profits for the year would be "materially ahead of current market expectations".
In an update released before yesterday's annual meeting in Glasgow, the chairman Philip Rogerson said first-quarter trading in the group's international business had been "exceptionally strong".
As the shares jumped by almost 9% to 559p, chief executive Rupert Soames told a questioner at the meeting that some historic executive share options might now "rise like Lazarus from the dead, to the amazement of the people concerned". The group's shares touched 500p in May 2001 before diving to 120p in October 2002.
In the international power projects division, where governments in Africa and the Middle East are among Aggreko's customers, the company said six weeks ago that the business was running at very high levels of utilisation on a significantly larger fleet than last year.
A number of new contracts and major contract extensions had been landed in the past six weeks, Rogerson said. "As a consequence, we now expect that the current levels of utilisation will continue into the second half." First-quarter profits in the US were lower than in last year's period of reconstruction after hurricanes Rita and Katrina. "However, revenues continue to grow and we expect our operations in North America to make progress for the year as a whole. Recovery in Europe has continued apace, with revenues and profits in the first quarter significantly ahead of 2006. Overall, the group has made a very strong start to 2007."
Shareholders heard that integration of the £95m acquisition of Aggreko's biggest global competitor, GE Rentals, was going better than expected, with fewer redundancies and expected costs of £9m, not £16m.
Angus Cockburn, finance director, said although the group's net borrowings had doubled to £205m, and interest cover would fall this year, return on capital had gone up from 18.6% to 22.1%, and cashflow from £102m to £160m, while dividend cover had strengthened.
Aggreko's capital investment, aside from GE, shot up from £80m to £128m last year, and Soames said it would rise to £175m this year.
He said later: "We are investing in fleet at a huge rate. Our colleagues at Dumbarton are certainly earning their keep - our production rate in the last couple of months has been running at about 15 large units a week."
He told shareholders that 2006 was "truly a vintage year". The international business had performed particularly strongly in Africa "where we did business in 21 countries", and the new range of gas-powered generators being produced in Dumbarton was already in use in Tanzania.
He said the non-project business, which grew trading profit by 47% last year, was also growing fast in the Middle East and Australia.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article