Profits Lower Than Expected At Aggreko Plc

The shares of Aggreko (LSE: AGK) slumped 6% to 1,670p during early London trade this morning after the temporary-power supplier revealed first-half profits had slipped 2% to £146m, slightly worse than the market expected.

Aggreko, the world leader in supplying temporary power for events such the World Cup and London Olympics, confirmed its revenues had grown 5% compared to last year to reach £760m.

Of the £270m cash generated by Aggreko over the period, £123m went toward funding capital expenditure projects, enhancing the company’s fleet of equipment. A further £126m was used to reduce Aggreko’s net debt position to £552m by the end of the period.

Rupert Soames, Aggreko’s chief executive, remarked:

“Our expectations for the full year remain unchanged… We expect revenues in Power Projects to be higher in the second half than in the first, as increased revenues from our gas projects offset reduced revenues from Military and Japan… On an underlying basis we expect that the Local business will continue to perform well in the second half with margins anticipated to improve year on year, in part reflecting the growth in mini power projects.”

With a market cap of £4.5bn, Aggreko’s shares trade at 18 times expected earnings, and offer a prospective dividend yield of 1.6%.

Of course, whether that valuation, today’s results and the future prospects for the power industry all combine to make shares of Aggreko a ‘buy’ remains your decision.

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> Mark does not own any share mentioned in this article. The Motley Fool has recommended shares of Aggreko.