UPDATE 2-Aggreko shares drop as outlook disappoints

Mon Jun 20, 2011 6:45am EDT

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(Adds detail, analyst, executive comments, update shares)

* Sees annual profit slightly ahead of last year

* Downplays threats from Horizon's APR Energy buy

* Sees first-half trading profit at 2010 levels

* Increases fleet investment by 30 mln pounds

* Shares fall 3.7 percent, top FTSE loser

By Adveith Nair

LONDON, June 20 (Reuters) - Aggreko , the world's biggest provider of temporary power, disappointed investors hoping for an upgrade to its full-year earnings outlook , making it the top blue-chip faller in London.

The company forecast full-year trading profit slightly ahead of 2010, in line with prior views, pulling its shares down 3.7 percent to 1840 pence at 0930 GMT.

"There may have been people looking for upgraded expectations, which has been the case for Aggreko in the past -- they have upgraded quite a few times," Panmure Gordon analyst Paul Jones said.

Aggreko shares which have already shed 5 percent since Horizon announced a deal to buy out APR Energy, Aggreko's largest competitor, last week.

Analysts say that deal will hand APR the funding it needs to expand, but Aggreko Chief Executive Rupert Soames downplayed the threat.

"The market is big enough for two and probably more competitors," he said.

The company also raised its capital expenditure forecast, which analysts said could assuage some of the concerns following the APR deal.

"This is, by nature, a business that needs large amounts of capital investment," Soames said. "We've just increased our capex to over 400 million pounds in a single year, so we've got a lot of firepower in terms of our ability to invest."

Aggreko plans to raise the rate of fleet investment by a further 30 million pounds ($48.7 million), in addition to the increase announced in April, taking forecast fleet capital expenditure for the year to about 420 million pounds.

Panmure Gordon's Jones said this was a good indicator of the short to medium-term strength of the market.

"With a number of different geographical markets looking strong for the remainder of 2011, we remain confident of further growth," he said.

Canaccord analyst Arabella Llewellyn said the move highlighted Aggreko's position as "the leading, best capitalised, player in the market". ($1 = 0.615 British Pounds) (Reporting by Adveith Nair; Editing by Julie Crust and Will Waterman)

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