Aggreko H1 profit and revenue hit by weak oil price

Aggreko tumbled on Wednesday after the FTSE 250 temporary power provider posted a drop in first-half profit and revenue as weak oil prices took their toll on the company.

For the six months to the end of June, pre-tax profit slid 31% to £61m on revenue of £685m, down 12% from the same period in 2015. Analysts had been expecting revenues of around £712m.

The company pointed out that its Rental Solutions business was seasonal and normally weighted to the second half. It continues to expect challenging conditions in North America, which it reckoned will more than offset good growth in its other regions and said the outlook for the balance of the year remains “cautious”.

Still, the Power Solutions performance is expected to improve in the second half thanks to new work won in the first half in Eurasia and the Middle East.

Chief executive officer Chris Weston said: “The trading environment in this first six months has been difficult, with the lower oil price continuing to impact a number of our markets. We are holding our guidance for the full year while recognising the importance of securing key contract extensions and the seasonal weighting of our North American business to the second half.”

Aggreko held its expectations that full-year profit before tax and exceptional items would be slightly lower than last year on an underlying basis.

RBC Capital Markets said the results were weaker than expected, but pointed out they were always going to be weighted towards the second half. The Canadian bank had expected revenue of £700m and pre-tax profit of £75m.

“Clearly, there is a material forex benefit post Brexit, which is already reflected in our forecasts. However there are caveats around a challenging North American market in Rental solutions, a competitive environment and an assumption that the Argentina, Venezuela and Yemen contracts will all be rebid,” RBC said.

At 0945 BST, shares were down 12% to 1,083p.