More on Aggreko
Aggreko: 2005 results
Aggreko grew strongly on the back of strong growth in North America, Asia and South America. There was a significant boost from the hurricanes in the US but even stripping out the effect of this there was underlying revenue growth of 25% and trading profit growth of 19% (both at CER).
Given that North American revenues also benefited from favourable weather, revenues in the Middle East from a high level of construction and there were a number of other one-off factors, the current level of growth is clearly not sustainable.
In spite of this the underlying growth trends in almost all regions are healthy. Even leaving for an element of cyclical growth, and the one-off factors, Aggreko has demonstrated that it is capable of growth across a wide range of operations.
In addition Aggreko International Power Projects (which sell larger scale power electricity generation capacity to national grids in countries with poor infrastructure) continues to grow.
Add emerging markets exposure in the core business and a good track record in its major markets and Aggreko seems well positioned to continue growth.
However this is very unlikely to be growth at current levels. This makes the prospective PE of 20× (at 293p) with a 2.2% yield look expensive even for the growth.
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