Aggreko sinks into the red after taking £181mln of impairment charges

The board considered the impact of the COVID-19 pandemic, the lower oil price and the acceleration in the transition to lower-carbon technologies when writing down the value of its assets

Aggreko -

Aggreko PLC (LON:AGK) came under selling pressure after it said it expected 2020 profits to at least halve from 2019’s levels.

The emergency heating and power provider withdrew full-year guidance in March but has now indicated it is confident it can deliver profit before tax (excluding exceptional items) for 2020 of between £80mln and £100mln.

The company’s profit before tax in 2019 was £199mln and the consensus forecast for this year is £103l.6mln.

On the plus side, the company, which suspended dividend payments back in March, confirmed it would pay an interim dividend of 5p in respect of 2020.

The group, which makes a lot of its money from providing services to large sporting events, said it has seen a gradual improvement in performance in some sectors since May although it is unlikely to see the strong second half to the year that it normally enjoys.

Revenue in the first half of 2020 slipped to £667mln from £768mln in the corresponding period of 2019.

The half-year underlying profit before tax was £47mln, down from £60mln the year before. The profit became a loss of £134mln after write-downs of £181mln reflecting the impact of the coronavirus (COVID-19) pandemic, the lower oil price and an acceleration in the energy transition to lower carbon technologies.

"We entered the year with positive momentum and we continue to believe that our focus on the disciplined execution of our four strategic priorities positions us well to meet our customers' evolving needs in the changing energy market,” said Chris Weston, the chief executive officer (CEO) of Aggreko.

“We continue to expect the group to deliver improved margins and achieve its mid-teens ROCE [return on capital employed] target, underpinned by our ongoing focus on operational efficiencies,” he added.

In a separate announcement, the company said that former Barratt Developments CEO Mark Clare has been appointed to the board as a non-executive director prior to his taking over as chairman of the board on October 1 from Ken Hanna.

Clare is currently the chairman of Grainger PLC.

Shares in Aggreko were off 1.8% at 409.4p in the first hour of trading.

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