By Scott Wright
SHARES in Aggreko closed up more than four per cent last night after the company said it had agreed revised terms to its deal to provide power to the Tokyo Olympic and Paralympic Games.
Glasgow-based Aggreko, which has a long track record of providing power to major sporting events, told the City yesterday that the renewed contract with the Tokyo Organising Committee would now have a revenue value of around $315 million to the group.
The deal was renegotiated following the postponement of the Tokyo Games, which has been due to take place last summer, because of the coronavirus pandemic. They are now expected to take place in July and August this year.
READ MORE: Aggreko reveals net zero target as it signals tentative recovery
The contract was originally estimated to be worth $200m to the temporary power generator when it was first announced by Aggreko in December 2018. The value of deal, which will see the company provide electricity to 43 competition venues, the athletes village and the international broadcast centre, was then estimated by the company to be worth $250m in April last year.
Now it is worth $315m, with latest revision reflecting the impact of the Games' delay, including the cost incurred by the firm in providing warehousing, offices and apartments for staff in Japan. There have also been some changes to the scope of the work.
READ MORE: Aggreko reveals it will employ 500 at Tokyo Games
Speaking to The Herald in April 2019, chief executive Chris Weston said Aggreko could ultimately have as many as 500 people on the ground in Japan when the Games take place. The company is expected to gradually increase the number of people in country in the months ahead as preparations build up, depending on travel restrictions related to coronavirus.
The company reiterated profits guidance of £170m to £190m for its current year, which “assumes the Games proceed as planned at this increased overall contract value.”
Shares closed up 27p, or 4.2 per cent, at 666.5p.
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