Power producer adjusting model
Aggreko to cut £80m from business over two years
The Glasgow-based company will remove duplication, improve procurement practices and project site efficiency.
New chief executive Chris Weston announced the cost savings along with a 21% drop in half-year pre-tax profit from £130m to £102m caused largely by a tightening of demand and the lower oil price.
Mr Weston said 2016 will be a year of change in the business with markets remaining difficult. Margins and returns are likely to be lower in the short term.
The company declared a maintained interim dividend of 9.38p per share to be paid on 2 October.
Mr Weston said: “The performance of the group in the first half was impacted by difficult trading conditions in a number of our markets, notably Bangladesh, and external factors, including the impact of a lower oil price and ongoing security concerns in Yemen.
“Whilst we initially expected our financial performance this year to be broadly in line with last year, these challenges mean that, as announced on 24 July, we now expect profit before tax to be between £250 million and £270 million for the full year.
“Our new organisational structure, which incorporates Rental Solutions, comprising our local business in developed markets, and Power Solutions, comprising our Power Projects business and local business in developing markets, better focuses the business on our markets and our customers, providing a more effective platform for growth.
“Aggreko is the market leader in the provision of fast, mobile, modular power, fulfilling a critical need. It is clear that although the market environment has changed, that our business model is sound and that we have good growth opportunities in each of our markets.
“Through focusing on three business priorities: our customers; our technology; and our efficiency, we are positioning the business for its next phase of growth. I am impressed by the commitment of our people and our culture and I am confident that our new focus and structure will see the business return to growth.”