Aggreko PLC (LON:AGK) said it is in a strong financial position as it faces the challenges presented by the spread of the coronavirus (COVID-19).
The emergency heating and power provider has considered a range of scenarios to stress-test its liquidity position through to the end of this year and these show that even in the “reasonably probable worst-case scenario”, it should, with appropriate mitigating actions, remain within its financial covenants, while maintaining headroom under its existing committed lending facilities.
Those appropriate mitigating actions include rescinding the recommendation of payment of a final dividend in respect of its most recent fiscal year.
Not surprisingly, it has also withdrawn guidance on this year’s performance issued earlier this month.
Since Aggreko last updated the market on 3 March, the impact on the group's revenue arising from COVID-19 has been limited and what it has experienced has been primarily in the events sector; however, as central governments and businesses take further action to contain and delay the spread of the virus, there is now significant uncertainty around future demand across several sectors and geographies. The recent sharp fall in the oil price has compounded this level of uncertainty.
Additionally, the group is beginning to face some operational challenges getting its people to project sites as countries close borders and restrict travel. In terms of our supply chain, there has been relatively little impact to date although it is experience delays of a few weeks in equipment orders from China.
The company is still working on the basis that the Olympic Games, which are due to start on 24 July, will go ahead.