Shares in Aggreko Plc (LON:AGK) have plunged today after the world’s largest provider of temporary power and temperature control equipment issued a profit warning for the full year. In a trading update published today, the company said full-year pre-tax profits would be in the region of £250 million to £270 million, significantly lower than the market consensus of £293 million. In its last full-year report in March, the FTSE 250 firm posted a pre-tax profit of £289 million and said it anticipated achieving the same result in the current financial year.
Aggreko’s expectations have in part been subdued by lower anticipated prices for contracts in Bangladesh. The company said that gas contract extensions in the country were entering the final stages of approval, but trading terms were likely to be less favourable than our earlier expectations.
Aggreko have also been experiencing a slowdown in its North American business due to weaker market conditions. In addition, its offshore oil and gas business in the Gulf of Mexico has started to feel the effects of the lower oil price.
Adding more pressure on the Aggreko’s bottom line, ongoing security challenges have prevented the company from operating at full capacity in Yemen. Aggreko said that it would seek to mitigate the profit impact by reducing operating costs, but nonetheless, “there will be a net adverse impact on profits this year and in 2016”.
In today’s trading, Aggreko shares tumbled 11.8 percent to 1,261.00p, increasing their year-to-date decline to 16.2 percent. The company’s market capitalisation currently stands at £3.2 billion.
The 17 analysts offering 12 month price targets for Aggreko have a median target of 1,461p, with a high estimate of 1,850 and a low estimate of 1,240p.