Power generator hire business Aggreko PLC (LON:AGK) blew a fuse as it warned over its business in Argentina and said it was struggling to get paid in Africa.
Revenue for the third quarter was 1% up on last year on an underlying basis with reported revenue up 8%.
Problems are mainly in the utiity division. Pricing and off-hires affected Argentina while the overall order intake has halved to 666Mw (2016:1,034 Mw).
Excluding Argentina, the increase was 3% on an underlying basis with the UK and US seeing good improvements.
The prospect pipeline continues to be healthy, Aggreko said, but it is still taking longer convert these to sales than last year.
Half of capacity in Japan has become available early, while 214Mw of volume in Argentina will off-hire at the end of 2017.
The off-hire rate for the nine months was 24%, which will rise to 30% for the full year.
Payment remains a problem, particularly in Africa where liquidity remains' a challenge'.
“No customers dispute the debt, all have made payments and we are in discussions with customers to reduce the remaining overdue debt," said the statement.
“Our full year guidance remains unchanged. The trading performance continues to support our view that, Argentina aside, we will grow this year.”
UBS a seller
Broker UBS added that the underlying order intake is weaker than hoped by this stage of the year, with Aggreko continuing to see a healthy pipeline but delayed conversions.
Lower intake clearly puts more pressure on forecasts for next year, but equally Aggreko is flagging further headwinds.
“Consensus forecasts for the 2018 financial year of about £225mln currently implies more than12% growth overall, but these factors make this challenging and we expect to see consensus downgrades. “
Sell is the broker’s view with a price target of 760p.
Shares fell 9.79% to 875p.
-- adds broker comment--