Shares in Aggreko have risen sharply after the Scottish temporary power company revealed new contracts to supply next year’s World Cup and Commonwealth Games.
Confirmation of the new deals came as Aggreko issued an upbeat pre-close trading update yesterday in which the firm said results for the full year were likely to be slightly ahead of expectations.
The Glasgow firm said revenues for the period to December 31 were likely to come in at around £1.57 billion a similar figure to that achieved in 2012 while pre-tax profits were expected to be at least £335 million.
The profit figure is significantly below the 2012 out-turn of £365m but those results were inflated by the company’s involvement with the London Olympics.
Aggreko said that on an underlying basis the 2013 result was likely to be about 3% higher than the previous year.
The company has supported a range of showcase sporting events including supplying power to the London and Beijing Olympics and the World Cup in South Africa among other global events.
The announcement of Aggreko’s involvement in the Commonwealth Games in the FTSE 100 firm’s home city has been welcomed.
The contract will see Aggreko provide power to the games’ 13 sports venues and to the athletes village via 103 individual generator sets connected through a network of more than 1,000 distribution boards and 200 kilometres of cabling.
“I am delighted to see the addition of Aggreko to the Glasgow 2014 sponsor family,” said Michael Cavanagh, chairman of Commonwealth Games Scotland.
In its update yesterday, Aggreko said revenues in its power projects business was expected to be around 2% lower than in 2012 with underlying trading margins down to around 30%. The firm said the division had secured 700MW of new orders during the year including a new 60MW diesel generation contract in Panama, the first time a temporary power supply will have entered a country’s wholesale electricity market.
Aggreko said its local business was on track for a “good” full year performance with underlying revenues around 6% ahead on the year and slight growth in margins anticipated.
The company said it remained in a “strong” financial position and debt was in line for a significant cut.
“Strong cash generation, mainly driven by lower capital expenditure, is expected to reduce net debt by around £200m over the prior year, with resulting net debt likely to be below £400m at the year end.”
Shares closed up 128.77 at 1,644.77 following trading on Monday.