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Shares in Aggreko dropped as much as 11 per cent in early trading on Tuesday, after the temporary power provider reported weak trading in one of its businesses and delays in payments from some of its customers.
In a third-quarter trading update, the company reported decent growth in its rental solutions arm – which focuses on renting equipment to customers in developed markets – and its industrial power solutions arm – which rents to businesses in emerging markets.
However, revenue in its power solutions utility business – which installs and operates power plants in developing countries – dropped 15 per cent compared to the same period last year. A large part of that was caused by weakness in Argentina, where onerous legacy contracts had already prompted a profit warning earlier this year. But the wider business also had issues converting “prospects” to new business, noting that conversions were “still taking longer” than last year.
It also suffered from delays in payment from some customers, particularly in Africa. Aggreko said “no customers dispute the debt”, but liquidity “remains a challenge” in some locations.
Aggreko said it is still on track to meet its full-year target of growth after excluding the Argentinian business. However, even after excluding Argentina, utility revenues fell 7 per cent, which Panmure Gordon’s Michael Donnelly said makes earlier assumptions of 2 per cent annual growth look “too optimistic”.
Shares in the company were down 9.6 per cent at publication time, to 877p.