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Aggreko on the front foot as 2018 results beat its expectations

The group said the outlook for 2019 is in line with market forecasts
Aggreko maintained its full year dividend

Aggreko PLC (LON:AGK) said 2018 results met market expectations and exceeded its own guidance, supported by a strong performance in its rental business.

Pre-tax profit fell 4% on a reported basis to £182mln, hit by foreign exchange headwinds, but rose 10% on an underlying basis.

READ: Aggreko wins US$200mln 2020 Tokyo Olympics power contract

The supplier of temporary power generation and temperature control equipment generated revenue of £1.7bn for the year, up 4% at actual exchange rates or up 8% at constant currency.

The rental solutions business achieved a 22% rise in underlying revenue to £822mln, accounting for 52% of the total, driven by growth in North America where the group earned £27mln from hurricane-related work.  

The power solutions industrial unit delivered a 7% in underlying revenue to £424mln, boosted by demand in Latin America.

Underlying revenue in the power solutions utility unit, however, dropped 14% to £342mln due to off-hires in Zimbabwe, Bangladesh and Japan along with lower volumes and pricing in Argentina. 

Aggreko maintained its dividend at 27.1p per share.

Currency headwinds led to a decline in the return on capital employed (ROCE) to 10.3% from 10.7% but underlying ROCE rose 0.5 percentage points.

“With the wide-ranging initiatives we are implementing to improve our operational and capital efficiency, we are confident we can meet our mid-teens ROCE target in 2020,” said chief executive Chris Weston.

The outlook for 2019 is in line with market forecasts despite foreign exchange headwinds and the impact of the adoption of IFRS 16 accounting measures, the company said, adding that its performance will be weighted towards the second half.

Shares rose 1.09% to 739.20p in morning trading.

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