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Aggreko has posted a 3 per cent fall in revenues and warned that pricing pressure in its Argentina business would trigger a drop in pre-tax profits for 2017.
Revenues at the Glasgow-based power equipment supplier fell to £1.52bn in 2016 – a 3 per cent fall from the previous year and lower than analysts’ predictions of a rise to £1.57bn.
Profit before tax fell 24 per cent to £172m compared to 2015 and was still down 12 per cent at £221m when not accounting for exceptional items.
The group made no annual increase to its full-year dividend, which it proposed maintaining at 27.12p per share.
Chris Weston, chief executive of Aggreko, said:
We expect to see growth across the group in 2017, augmented by incremental annualised cost savings of £25m from the second half.
However, this will be more than offset by the significant impact of Argentina and as a result we expect full year profit before tax and pre-exceptional items to be lower than last year.
The company has been renegotiating its contracts in Argentina, where it has operated since 2008, after legacy contracts were signed when the risk of operating in Argentina was higher. Analysts have predicted significant price cuts in the new contracts.
Shares in the generator hire specialist hit a seven-year low in a November amid a drop in revenues after the company warned it might need to write off the value of some of its equipment.
But interest in the company was buoyed late last year by the rise in oil and gas prices as well as an uptick in orders at Aggreko’s emerging markets Power Solutions division.