Aggreko Shares Tumble After Profit Warning

Aggreko, the temporary power and cooling specialist, has warned that its annual profit will come in lower than current City hopes due to less favourable contract terms and a further slowdown in its oil and gas business in North America.

The company, which gave guidance on the impact of the shale slowdown in the Gulf of Mexico in May, said a worse-than-anticipated decline in production would weigh more heavily on full-year earnings.

Oil and gas-related business accounts for about 17 percent of Aggreko’s revenue, with its largest operations based in the North American shale market.

‘As a result of these trading issues, we now expect our full year profit before tax to be between £250m and £270m.’.

Aggreko posted a pretax profit of GBP289 million for 2014, down from GBP333 million in 2013.

Shares in the company, whose equipment powers major events and covers electricity shortfalls, plunged 15 percent to a five-year low, making the stock the top loser on Britain’s mid-cap index.

The announcement comes four months after management said its profit would be unchanged for the year at £289m.

Analyst Andrew Gibb at Investec said: ‘It is hard not to be impressed with the group’s track record, but it has become increasingly clear that this will be difficult to replicate.’.

Aggreko has in recent years benefited from expanding its business into emerging economies, some of which are now being affected by increasing geopolitical uncertainty or falling commodity prices.

Chief executive Chris Weston, who joined Aggreko last year from British Gas, replaced Rupert Soames, whose tenure saw the company increase ten-fold in value.