Aggreko saw its shares rise strongly yesterday after it said its annual performance would exceed market expectations and pre-tax earnings would be at least 50% higher than last year.
That implies profits of about £188million, about 10% higher than consensus forecasts.
The Glasgow-based world leader in the supply of temporary power, temperature control and oil-free compressed-air services, said business in July, August and September had been better than anticipated, with revenue in the quarter growing by 39%.
It said this was thanks to strong demand in the Middle East, Asia-Pacific and Latin America, where revenue grew by 59% in the third quarter, or by 26% excluding £11million of revenue from the Beijing Olympics.
In North America, revenue grew by 10%, as customers needed support following hurricanes Gustav and Ike. Revenue in Europe was down 3% year-on-year.
The group also said yesterday it had decided to locate a new £20million manufacturing base near Dumbarton, where most of its fleet of rental power generators are designed and manufactured and where it already employs more than 250 people.
It said the rapid growth of its business meant it required additional capacity, and after benchmarking Dumbarton against several other locations – including China – had concluded that Scotland was the most cost-effective area in which to operate.
Aggreko said net debt, at £310million, had increased by £32million since June 30 and was £94million higher than at September 30 last year, reflecting increased investment in new rental fleet, and the rapid growth of the business. It added, however, that it had secured additional funding of £60million from its banks to bring its total facilities to £463million.
Aggreko said profits in Europe in the second half of the year would be similar to last year, while profits in North America would be well improved. It said its businesses in the Middle East, Asia, and Latin America were all expected to make further strong progress in the period.
The confident profit forecast drew “buy” recommendations from brokers Investec Securities and Evolution Securities, and from the Royal Bank of Scotland, along with sharply-increased share price targets of between 600p and 825p.
Aggreko’s shares settled up 9.6% at 438.5p, having traded earlier as high as 448.75p.