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Aggreko reports trading in line with expectations as Winter Olympics and Ryder Cup lift revenues

The FTSE 250 group, which rents out power, temperature control, and compressed air systems, said underlying group revenue for the period was up 11% on last year
South Korea Winter Olympics 2018
The firm's Power Solutions Industrial arm saw revenues helped by the Winter Olympics in South Korea

Aggreko PLC (LON:AGK) said trading is in line with market expectations as the Winter Olympics in South Korea and the Ryder Cup in France helped lift its underlying revenues in the nine months to 30 September.

In a trading update the FTSE 250 group, which rents out power, temperature control, and compressed air systems, said underlying group revenue for the period (excluding currency and pass-through fuel) was up 11% on last year.

READ: Aggreko shares jump as HSBC upgrades the stock to 'buy'

In the Rental Solutions segment, which comprises 52% of the group, underlying revenues were up 26% with the north American arm growing 32% reflecting strong growth in the oil & gas sector.

Aggreko also said its Continental Europe business had had “a good nine months”, benefiting from the Ryder Cup golf tournament in France, while the Northern European and Australia Pacific businesses saw good growth and increased activity in the oil & gas and mining sectors respectively.

In the Power Solutions Industrial arm, about 27% of the group, underlying revenues rose 11% and were supported by the Winter Olympics in South Korea as well as oil & gas sector growth in Eurasia.

However, the firm said market conditions in the Middle East were “challenging” due to the blockade of Qatar, while underlying revenues in Africa were down on the prior year.

The only branch of Aggreko to see a decline was its Power Solutions Utility arm, about 21% of the group, which reported a 14% drop in underlying revenues due to lower volumes in Argentina and the continuing effect of off-hires in Zimbabwe, Bangladesh and Japan.

The company added that the overall revenue reduction in the business was primarily driven by lower volumes, with year-to-date average megawatts on hire down 15% at 2,691 MW (2017: 3,169 MW), reflecting an increased year-to-date off-hire rate of 35% (2017: 25%).

The group expected the full-year off-hire rate to be around 40%.

Looking ahead, the firm said it was on track to deliver its guidance of full-year profits in line with 2017, adding that it also expected to achieve “a small working capital inflow in the second half” with fleet capital expenditure now expected to be around £200mln, down from £246mln last year.

Aggreko added that it expected its year-end net debt/EBITDA ration to be between 1.2 and 1.3 times.

In early trading Tuesday, Aggreko shares were up 1.7% at 862p.

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