Market Rerport: Aggreko blows a fuse after oil price dive hurts profits

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The City has pulled the plug on temporary power provider Aggreko after its first-half profit slumped by almost a third.

Having fallen short of City expectations, the company, which supplies generators for events like the Glastonbury festival, plummeted to the bottom of the FTSE 250 leaderboard, sliding 155p, or almost 13%, to 1076.9p.

Aggreko blamed the oil price slump, which hit a number of its markets during the “difficult” period. Revenue was down 12% to £685 million in the six months to June 30, while pre-tax profit was 31% lower at £71 million.

Though he remained “cautious” for the remainder of the year, boss Chris Weston maintained guidance for the full year, pinning his hopes on securing key contract extensions and an uptick in Aggreko’s North American business. 

The firm is expecting underlying pre-tax profit to be slightly lower than it posted last year.

Aggreko’s retreat contributed to the FTSE 250’s 62.86-point decline to 17,000.15. 

But Goldman Sachs said things could be a lot worse for the mid-cap index. In its opinion, its stocks are not fully reflecting the flagging economy since the referendum and are much more vulnerable to Brexit than the blue-chip FTSE 100, which could benefit from further weakness in the pound.

The assessment did little for the latter, however, which edged down 8.24 points to 6637.16, as traders chewed over news of a contraction in activity in the services sector.

The index was in need of a good news injection in the form of an interest rate cut from the Bank of England, Spreadex’s Connor Campbell said. Mark Carney and co’s decision is due tomorrow.

The gloom also spread over Game Digital, down 5p at 69.5p, as it revealed a near-9% sales slump over its past year. 


Coming soon: The Oculus Rift virtual reality headset (Getty Images)

However, it remained upbeat for next year with new products such as virtual-reality headset Oculus Rift and the Xbox One S due.

Fellow retailer Poundland was suffering after Deutsche Bank revealed it had upped its stake in the discount chain to just over 12%. Shares in Poundland, which recently accepted a takeover bid from South Africa’s Steinhoff, dipped 0.25p to 224.3p.

Upmarket wallpaper maker Walker Greenbank was able to brighten things up. It rose 2.85p to 199.85p as it announced its flood-hit factory was almost back in full production.

On Aim, nutrition brand Science in Sport pedalled 6p higher to 61p after it inked a deal to be the official sports nutrition supplier to USA Cycling.

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August 3, 2016 |
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