£276m wiped off Aggreko as overseas sales slump
SHARES in Aggreko ran out of power yesterday after it admitted business had been hit by late customer payments and weak trading in one of its divisions.
The company, which is the world’s biggest temporary power provider, reported a 15pc plunge in sales in its utility division – largely as a result of heavy discounting in Argentina.
Under its utility business, Aggreko installs and operates power plants in developing countries. But the faction has been hurt by the weakness in the South American country.
The Glasgow-based firm has operated in Argentina since 2008, but most of its contracts were signed when the risk of operating in the country was higher.
As a result the old agreements were more lucrative, as they reflected a higher risk of foreign exchange controls.
Aggreko, which has been battling lower demand for its generators from North American oil and gas customers due to slumping oil prices, priced in a £34m discount to secure a contract in Argentina earlier this year but in March warned its profits for the full year would fall as a result of the discounts. In a further blow to investors yesterday, Aggreko said its business had also been hit by delays in customer payments – primarily among those in Africa.
However, its equipment rental arm fared considerably better with sales up 9pc on the year before. The boost did little to quell shareholders however, and shares dropped 11.1pc, or 108p, to 862p, knocking £ 276m off its market cap.
Despite the slump the FTSE 250 finished up 0.37pc, or 72.69 points at 19,943.98, while the FTSE 100 finished up 0.30pc, or 21.88 points, at 7411.34. Shares in Intertek and
GYG plunged after the firms revealed they were still recovering from the knock-on effects of this year’s hurricanes.
Product testing company Intertek said its business in the US was still recovering from the disruption in the southern regions of the US which delayed the operations of its clients in the last ten days of August, September and October – hurting its building and construction and industry services business as a result.
It said the disruptions reduced its sales performance by £5m between August and October.
The hurricane woes were echoed by superyacht maintenance company GYG which said it expects profits to fall below expectations after business was hit by the extreme weather in the US and Caribbean. It said the hurricanes disrupted cruising patterns for yacht owners and forced them to extend their Mediterranean season while they assessed the facilities in the Caribbean cruising grounds.
As a result, decisions over yacht refurbishments were delayed – resulting in lower than expected refit sales. The firm, which floated on AIM in July, said it was further hit by a substantial delay in another contract that was due to start in September – and the sales would not be recognised before 2018.
It finished down 2.3pc, or 3p, to 127.5p, while Intertek slumped 4.3pc, or 230p, to 5175p.
Steel specialist Severfield soared after toasting a surge in half-year profits. The company, whose works include The Shard, the Olympic Stadium and the Tate Modern, said profits increased 59pc to £12.9m in the six months to the end of September. Sales increased 16pc to £137.1m, sending shares up 12.4pc, or 8p, to 72.5p.
Shares in ClearStar also soared 4.5pc, or 2p, to 46.5p after news it had poached a rival executive to head up its sales business.
The company, which provides the technology for background checks, appointed Robert Martin from US rival First Advantage, as vice president of sales and business development.