Aggreko profit drops in 2017 as power solutions utility business weighs

Pre-tax profit for 2017 fell to £195m from £221m the year before, while diluted earnings per share declined to 53.94p from 61.95p. Operating profit fell 8% to £229m, while group revenue was up 14% to £1.7bn and the dividend per share was flat at 27.12p.

Cash flow during the year improved to £450m from £388m in 2016, which the company said was down to the working capital initiative beginning to deliver results. In addition, Aggreko's financial position remains strong, with net debt to EBITDA of 1.2 times, in line with the previous year.

The company also said that it expects the Argentina contract for its power solutions utility business to renew, but at a further discount to 2016.

Chief executive officer Chris Weston said: "I am pleased that we are seeing revenue growth return, with strong performances in both rental solutions and power solutions industrial. As expected, the challenges in power solutions utility held back the group overall.

"Over the last three years we have stabilised the business, enhanced our service offering and positioned ourselves to prosper in rapidly changing energy markets. We have delivered over £100m in cost savings, invested in new systems and processes and developed new technology, all of which enables us to provide high quality solutions for customers. We expect 2018 group profit before tax to be in line with last year, on a constant currency basis."

RBC Capital Markets, which rates the stock at 'sector perform', said: "We would expect to see consensus profit before tax come down to circa £180-185m from the current £202m level. That said, the valuation looks undemanding…along with a big short interest."

At 0900 GMT, the shares were down 9% to 659.80p.