(Alliance News) - Aggreko PLC on Thursday posted a sharp swing to loss in the first half of 2020 as it declared its intention to pay dividends after previously suspending payouts in March.
Shares in the FTSE 250 power generator rental firm were trading 2.0% lower at 408.60 pence each on Thursday morning in London.
Aggreko said pretax loss for the first six months of 2020 was GBP134 million, swinging significantly from a profit of GBP60 million the year prior. This was as revenue fell 13% year-on-year to GBP667 million from GBP768 million.
Operating margin was 5.5%, down from 12%.
The Glasgow-based company attributed the deterioration to Covid-19, stating that the pandemic resulted in a sharp reduction in the oil price which hurt its oil & gas and petrochemical & refining sectors, the cancellation or postponement of events such as the Tokyo Olympic & Paralympic Games until the summer of 2021, and travel restrictions which had a negative impact on the mobilisation and demobilisation of projects.
It added that the pandemic also reduced liquidity and access to foreign currency for some of its customers, accelerated the energy transition towards lower carbon solutions and technologies, as well as increased freight and logistics costs as a result of the reduced supply available in the market.
Aggreko said that as a result, it booked a non-cash exceptional impairment charge of GBP181 million.
An interim dividend of 5p was declared, down 47% from 9.38 pence the year prior.
Looking ahead, the company said: "We currently expect to deliver a pre-exceptional pretax profit for the year in the range of GBP80 million to GBP100 million. Looking further ahead, despite our expectations of a slower economic recovery, we continue to expect the group to deliver improved margins."
Cash held as at June end was GBP123 million.
Separately, Aggreko said it has hired Mark Clare as a non-executive director and chair designate effective from October 1, succeeding Ken Hanna.
Clare is currently chair of residential property firm Grainger PLC and senior independent director of FTSE 100-listed water utility company United Utilities Group PLC.
He was senior independent director of betting firm Ladbrokes Coral Group, owned by GVC Holdings PLC from 2016 to 2018, a non-executive director of BAA PLC - now Heathrow Airport Holdings Ltd - from 2001 to 2006, and chief executive of FTSE 100-listed housebuilder Barratt Developments PLC from 2006 to 2015.
"We are delighted to welcome Mark to the board. Mark's appointment reflects his calibre and suitability for the role of leading the Aggreko board. He is an experienced non-executive director and chair, bringing a wealth of industry knowledge, strong leadership track record, extensive knowledge of customer needs and market leading service levels. We look forward to working with Mark," said Aggreko Senior Independent Director Uwe Krueger.
By Ife Taiwo; ifetaiwo@alliancenews.com
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