Aggreko has reported an 11.8 percent fall in full-year profit, sending its shares down more than 9 percent to their lowest in 8-1/2 years on Tuesday morning.

The company’s power solutions utility business, which installs and operates modular, mobile power plants in emerging markets, has been under pressure primarily due to lower pricing and volumes in Argentina.
The the world’s largest temporary power provider, which powers major events and covers electricity shortfalls, said its operating margin fell to 13 per cent in 2017 from 16 per cent a year earlier with margins in the power solutions utility declining 11 percentage points.

Aggreko expects to renew about 174 MW of contracts in Argentina but at a further price discount to the extensions it secured in 2016, it said.

The company forecast profit before tax this year to be in line with 2017, excluding the impact of currency, and said order intake was 137 MW so far this year.

The Glasgow-based company said pretax profit before exceptional items fell to 1£195m in 2017, from £221m in the preceding year. Revenue before exceptional items rose 14.2 per cent to £1.73bn.

Aggreko stock was down 9.5 percent at 655.2 pence at 0836 GMT and was the top loser on the FTSE mid cap index.

Fiona Cincotta, Senior Market Analyst at told Decentralized Energy, “A recovery in the oil price hasn’t produced the bounce in Aggreko’s performance that many in the market were hoping for. Instead, the company has booked yet another decline in annual profit and forecast a flat performance for 2018.

“Of big concern is the erosion in operating margins, which have contracted by a full three percentage points to 13%.”

“Management is confident that product enhancements will bear fruit and there’s some cause for optimism in the underlying revenue figures. But investor patience will be wearing very thin amid what has become a consistent stream of earnings shocks.”