Shares in Scottish temporary power firm Aggreko jumped more than 12% yesterday despite it suffering a £37million drop in profits last year and making gloomy predictions for 2016.
Aggreko said the timing of contract start and end dates and a slow start to trading in North America would lead to a reduction in first half profits of this year.
Oil and gas revenues from Aggreko’s rental business fell 25% in 2015 as the firm adjusted to low commodity prices.
The Glasgow-based company is on course to achieve savings of £80million by next year as part of a reorganisation plan which involved making about 700 employees redundant worldwide.
The company wrote down £26million relating to the reorganisation process, with funds being spent on professional fees and severance costs.
Aggreko declined to say how many of its Scotland-based staff had been removed, having said last year the impact on its Scottish workforce would be minimal.
The write-down gave Aggreko pre-tax profits of £252million, down 13% year-on-year, which was in line with expectations.
Revenues for the group as a whole fell by 1% to £1.56billion.
The damage stemming from low crude prices was partially softened by growth in Aggreko’s rental business in New Zealand owing to its involvement in emergency response work after cyclones hit the country.
Cyclone Palm devastated the South Pacific island of Vanuatu in March before moving on to New Zealand.
Aggreko also supplied power for the Cricket world cup in New Zealand.
Its power solutions division was bolstered by its work at the first European Games – a sporting event held in Baku, Azerbaijan.
The division also enjoyed growth in the Middle East, Russia and Africa, though its Latin America interests were dented by the mining sector slowdown and a challenging Brazilian market.
Its gas contract extensions in Bangladesh also turned out less favourable than expected, while security challenges in Yemen held back operations.
Despite a slip in revenues, Aggreko is increasing investment in its fleet to £250million in 2016, up from £237million last year.
Chief executive Chris Weston said the company’s performance was solid in the face of challenging market conditions, adding: “We have ended 2015 with a strong balance sheet, with net debt slightly down as we continue to generate good levels of operating cashflow and maintain discipline in our investment in new fleet.”
Shares were up 12.5% to £10.08 on the London exchange.