Pandemic and Low Oil Prices Drops Aggreko 15.4 Percent in 2020

Aggreko plc, international leaders in temporary power and temperature control, reported group revenue for the full year at £1,365 million (about U.S. $1,903.6 million) compared to £1,613 million in 2019, a 15.4-percent decline. Underlying revenue decreased 14 percent driven by the impact of COVID-19 and lower oil prices. Underlying operating profit dropped 40 percent. Underlying profit before tax was £102 million, slightly better than the company’s initial guidance of £80 to £100 million.

Aggreko realized strong operating cash inflow of £521 million, with a working capital inflow of £170 million reflecting good cash collections. Aggreko’s continued capital expenditure discipline resulted in fleet capex of £186 million compared to £189 million in 2019. The company maintains strong liquidity and cash position, with a reduction in net debt over the year of £204 million, and closing net debt to EBITDA of 0.9 times.

Aggreko’s Rental Solutions division reported £693 million in revenue, compared to £823 million in 2019, a 15.8-percent decrease.

North American underlying revenue declined 17 percent compared to 2019 as a result of the COVID-19 pandemic and lower oil prices. The most significant reductions were in oil and gas and the events sector. Oil and gas, which accounts for 15 percent of revenue, dropped 50 percent, while events, a much smaller sector, declined 51 percent. Encouragingly, Aggreko saw good growth in utilities in addition to revenue earned from storms in the second half of the year. Excluding the oil-and-gas sector, power volumes across North America jumped 21 percent year over year, driven by storm-response jobs.

“Aggreko has demonstrated resilience, professionalism and the critical nature of its services through the pandemic and I am very proud of our performance this year,” said Aggreko CEO Chris Weston. “We quickly established near-term priorities: we looked after our people, maintaining high levels of engagement; supported our customers, achieving our highest Net Promoter Score to date; and maintained our financial strength, delivering a strong cash performance in 2020. We enter 2021 well positioned for the recovery which we are seeing in our markets and this momentum supports our confidence in the business going forward. We have also set out our strategy for the energy transition, providing industry-leading commitments to be net zero by 2050, while achieving profitable growth and mid-teens ROCE in the medium-term. We are pleased with our progress in the transition to date, recently winning a solar-hybrid contract for a mine in Chile, and starting work on upgrading our Dumbarton facility into a hub for our net-zero initiatives. Reflecting the Board’s confidence in the outlook for the business and our financial strength, we are proposing a final dividend for the year of 10 pence per share.”

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