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CORRECTED-UPDATE 2-Aggreko's shares plunge as orders slump
November 21, 2017 / 8:51 AM / a month ago

CORRECTED-UPDATE 2-Aggreko's shares plunge as orders slump

(Corrects to remove reference to political tensions, paragraph 4)

Nov 21 (Reuters) - Shares of Aggreko, the world’s largest temporary power provider, slumped more than 11 percent on Tuesday after the company said orders at its unit that installs and operates power plants fell by more than a third.

New orders in the power solutions utility business fell 35.6 percent to 666 megawatts (MW) this year, while revenue at the unit dropped 15 percent in the third quarter.

The company said half of its 148 MW contract in Japan was terminated early, and it expects the rest of the capacity will be discontinued in the first quarter of next year. In Argentina, it expects 214 MW of contracted volume to be terminated by the end of this year.

A customer in Zimbabwe has also cut its order to 120 MW from 200 MW.

“The prospect pipeline continues to be healthy, however it is still taking longer to convert than last year,” Aggreko said.

RBC Capital Market analyst Andrew Gibb said he expects 2018 consensus forecasts to fall by 5-10 percent, given a weak order intake and further off-hires.

Peel Hunt cut its December 2017 profit-before-tax guidance by 4.8 percent and December 2018 profit by 8.9 percent on expected off-hires.

Aggreko reiterated its full-year outlook. It had issued a profit warning in March saying that its full-year results would be hit due to discounts in Argentina.

The company’s results were also hurt by discounts in Argentina that largely offset gains from hurricane-related demand in southern United States, leading total revenue to rise just 1 percent.

Aggreko shares were down about 9.5 percent at 878 pence at 1156 GMT. (Reporting by Hanna Paul in Bengaluru; Editing by Saumyadeb Chakrabarty and Alexander Smith)

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