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Aggreko’s International Business Increases in 2009; Rental in U.S. Declines

One of the few companies to increase revenue in 2009, Aggreko plc, the world’s leading temporary power and temperature-control rental company, posted an 8.2-percent revenue increase, largely on the strength of its International Power Projects segment. On a worldwide basis, Aggreko posted £1.024 billion (about U.S. $1.538 billion) compared with £946.6 million for 2008. However, rental business in North America declined 18 percent year over year, with temperature control business dropping 29 percent.

Trading profit for the worldwide business was £252.5 million, a 25.9-percent increase compared with £200.6 million in 2008. Profit before tax rose 28.4 percent to £244 million, compared with £190 million in 2008. While foreign exchange conditions were favorable to Aggreko, trading profit still grew 6.8 percent on a constant currency basis, chairman Philip Rogerson said.

Aggreko’s International Power Projects business grew 69.6 percent. However, Aggreko’s “Local” business dropped 33.8 percent on revenues.

Looking ahead Rogerson said the outlook over the next decade was bright for Aggreko. “We believe that a combination of inadequate levels of investment in new and replacement generating capacity, rapid growth in demand for power in emerging markets, and the implications of having to incorporate large amounts of renewable generation into power networks will bring increasing levels of stress and uncertainty to the electricity supply markets,” Rogerson said. “This is likely to present new opportunities for Aggreko in the years ahead.

Rogerson said growth in International Power Projects is likely to continue into 2010. “International Power Projects started the year with nearly 10-percent more capacity on rent than a year ago and about 10 months of forward order cover,” he said. “The order intake in the last quarter of 2009 was strong and we quoted for projects in 36 countries.”

In Aggreko’s “Local” business segment, revenue in North America declined 19.5 percent year over year, posting $309.8 million in 2009 compared with $386.2 million in 2008.

“Our North America business had a good start to 2009 with a strong first quarter helped by the Presidential Inauguration as well as work arising from the major storms of 2008,” the company said in its annual report. “From April onwards, market conditions became progressively more difficult, in particular in temperature control. While this performance was mainly attributable to poor market conditions, comparatives were particularly challenging in the second half which in 2008 included $26 million of storm-related revenue and a very strong year for our cooling towers business. This was only offset in 2009 by the $14.5 million of revenue from the Vancouver Olympics in the fourth quarter. In terms of business mix, rental revenue declined 22 percent and services revenue declined 14 percent. Power rental revenue for 2009 was 18 percent behind the prior year while temperature control revenue for the year was 29 percent behind last year. Despite the poor economic backdrop, the North American business continued to implement our Local business strategy of expanding our footprint and increasing our density, opening new service centers in Indianapolis, Gillette (Wyo.), Fort McMurray (Alberta) and Long Island.”

Aggreko has 144 service centers in 34 countries with 51 branches in North America.

Based in Glasgow, Scotland, with U.S. headquarters in Houston, Aggreko is No. 10 on the RER 100.

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