Aggreko targets £80m of cost savings after slump
The firm said it is targeting £80m of cost savings after half-year results to 30 June revealed pre-tax profits had fallen 21 per cent to £102m, on revenue of £781m.
Aggreko said it had faced difficult trading conditions in a number of markets, notably Bangladesh.
It also cited the impact of a lower oil price and security concerns in Yemen.
Underlying revenue from Europe, Middle East and Africa grew by 10 per cent to £344m with strong growth in Africa and a £13m contract for the first ever European Games athletics competition which was held in Baku, Azerbaijan. Profits in the region were flat at £53m.
Revenue in the Americas dipped seven per cent to £329m and trading profit fell by 29 per cent to £48m due to the impact of the oil price decline and last year’s figures including the football World Cup in Brazil.
In Asia Pacific underlying revenue dropped 17 per cent to £108m as mining markets continue to be weak. Trading profit fell 49 per cent to £13m.
Aggreko confirmed its earlier expectations that full-year profits are likely to be between £250m and £270m - at least 8 per cent lower than previously forecast in a poll of business analysts
The company reported it had reorganised the group into two units - Power Solutions and Rental Solutions - following a business review aimed at improving its operational efficiency.
It plans to add more engineering resources to its Dumbarton manufacturing facility as part of a consolidation process.
It has identified cost savings of £80m to be made by 2017, which will be reinvested to support growth and help margins and returns.
Aggreko will also reduce capital expenditure on its fleet over the year by £30m to £270m, which it said reflected current trading conditions.
Chief executive Chris Weston did confirm the global workforce will shrink but any impact in the UK is likely to be small.
He said: “Aggreko is the market leader in the provision of fast, mobile, modular power, fulfilling a critical need.
“It is clear that although the market environment has changed, our business model is sound and we have good growth opportunities in each of our markets.
“Through focusing on three business priorities - our customers, our technology, and our efficiency - we are positioning the business for its next phase of growth.”