(Reuters) - Aggreko Plc, the world’s largest temporary power provider, said it was reviewing the value of its North American fleet of oil and gas generators after further weakness in that market dragged down its third-quarter underlying revenue.
Shares in Aggreko, whose kits power major events and cover electricity shortfalls, were down 3.8 percent at 771.5 pence at 1236 GMT on Wednesday, making its stock one of the top percentage losers on London’s midcap index.
The British company said underlying revenue fell 7 percent year-on-year in the quarter ended Sept. 30, blaming further pricing pressure in a weak North American upstream oil and gas market and reduction in regional gas volumes.
Aggreko said in August that oil prices needed to be slightly higher for at least three to six months before more North American shale companies started renting its equipment.
“Given this continued decline (in revenue) we are reviewing the carrying value of specialist equipment for the oil and gas market, notably our small gas generators,” Aggreko said.
The company has been cutting costs and jobs, and reigning in its capital spending as increased geopolitical tensions have hurt demand as well as made payments more challenging.
Aggreko forecast a full-year pretax profit before exceptional items of about 225 million pounds at current currency rates, below Morgan Stanley’s estimate of 228 million pounds.
The company had previously said 2016 profit would be lower than 2015, with results contingent on the renewal or extension of contracts in Venezuela, Yemen and Argentina, its single largest market where it has deployed 450 megawatts.
Analysts raised concerns about Aggreko’s 2017 profit, as the company also said it had bid for a 200 megawatt contract in Argentina at a “significant discount to the historic pricing”. The outcome of the bid was still unknown, the company said.
The payment situation in Venezuela continued to be “very challenging”, Aggreko added.
Peel Hunt analysts, who have a “reduce” rating on the stock, cut their 2017 comparable pretax profit guidance to 225 million pounds from 260 million pounds.
Reporting by Esha Vaish in Bengaluru; Editing by Sunil Nair and Martina D'Couto