Lights go out for 200 at Aggreko as job cuts follow dive in profits

Click to follow

Aggreko, which supplies temporary power equipment, yesterday announced it was cutting about 10 per cent of its global workforce as it unveiled a 27 per cent drop in profits.

Of the planned 200 job losses over the next couple of years, Aggreko is expecting to cut about 40 positions in the UK with the bulk of an estimated 70 losses falling in the US.

In addition, the company is cutting the number of service centres it has in the US - local depots that typically employ about 15 people - to 46 from 59.

Aggreko is expecting the measures will cost up to £15m, which it will account for this year but will produce annual savings of £6m by 2006.

Rupert Soames, who became thechief executive in July, said the company was also looking to expand the business in South America and across Asia on an organic basis.

"We signed our first utility contract in South America in December and in the past two weeks we've signed two more deals," he said.

The cost-cutting measures and the new strategy are the result of a seven-month strategic review and were outlined as Aggreko announced pre-tax profits fell 27 per cent to £40m in 2003 on turnover of £331.8m - a reduction of nearly 2.5 per cent. Mr Soames billed 2004 as "the year of transition" for the group and one in which he expected trading would be broadly flat on 2003.

He is predicting growth the year after. "As far as we can see at this early stage in the year, we expect trading to be broadly flat between 2003 and 2004 ... we expect that because we are implementing our new structure and our new IT system, and [there is likely to be] some disruption," he said.

Despite the upheaval, Mr Soames remained upbeat. "We think the reward of getting to the end point far [outweighs] the short-term costs and the disruption," he said, adding: "Overall, we've got about 23 per cent market share and a very strong position."

Aggreko upped its dividend payout to 5.65p a share - an increase of nearly 2 per cent on the previous year, reflecting its "confidence in the medium-term outlook".