Financial Releases
Aggreko PLC Trading Update
18 Jun 2004
Aggreko plc, the world leader in the supply of temporary power, temperature control and oil-free compressed air services, is issuing the following trading update prior to meeting analysts and going into its close period in respect of the half-year ending 30th June 2004.
Trading Overview
As indicated in the Trading Statement at the time of our AGM, trading performance in the first half will be better than anticipated, although still behind that of last year. As previously announced, an exceptional charge not exceeding £15 million in respect of our restructuring will be booked during the year; the major part of this charge will be taken to the profit & loss account in the first half.
In North America, trading profit in the first half is expected to be above last year in both local currency and sterling terms, which, given the closure or rationalisation of 13 of 56 depots as part of the restructuring plan, is a good performance. Underlying revenues were similar to last year but had the additional benefit of a number of military contracts executed in the first half.
Aggreko International’s trading profit in the first half is likely to be at a similar level to last year in sterling terms. However, the business, most of whose contracts are priced in US dollars, has performed well; but for the movement in exchange rates between 2003 and 2004, profits would have been more than £2m higher. Service revenues will be below last year, primarily because we are not supplying fuel under the latest Sri Lankan contracts. Our major utility contracts in Asia, the Middle East and South America are all performing well and in recent weeks some important military contracts have been extended, further securing the order book for the second half.
As expected, first half trading profit will be significantly lower than the prior year in Europe due to three factors. First, the absence of major Spanish utilities projects which the business benefited from in early 2003; second, continued depressed market conditions in Benelux and Germany; third, the scale of the reorganisation of the UK business and the creation of the National Rental Centre (NRC) caused some short-term disruption to the operations of the business. This disruption was anticipated and, with the restructuring in the UK largely complete, the team is now able to focus on driving the business forward.
Strategy Update
The implementation of our strategy is progressing well. The centralisation of all our call handling and contract management in the UK business was completed ahead of schedule, with the opening of the National Rental Centre in Cannock in May. Planned headcount reductions in North America and the UK have been achieved; the requisite consultation processes to enable the restructuring to begin in our Continental European businesses have been finalised, and effort is now being focused on establishing National Rental Centres in Germany and France. The final release version of our Enterprise Resource Planning (ERP) software was completed on time, and rollout across the business will start in the second half.
Outlook
Looking forward, the business is about to enter its peak summer season, and the result for the year will clearly be heavily influenced by trading over the next three months. At this stage, our expectation, that the underlying trading performance of the business in 2004 will be at a level broadly similar to that in 2003, remains unchanged.
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For further information, please contact:
| Rupert Soames |
Aggreko plc |
| Angus Cockburn |
Tel: 0141 225 5900 |
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| Fiona Piper |
The Maitland Consultancy |
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Tel: 020 7379 5151 |