Aggreko International’s Local Businesses
Kash Pandya
Regional Director
Aggreko International
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AI Local Business
• AI Local Business is a mixture of long-established businesses
and new businesses
– Comprises all Local Business outside EME & North American business
– Middle East business transferred to Europe in 2009
• Has shown very strong growth since 2004, but some of this due
to one-offs
– Acquisition of GE businesses in 2006
– Beijing 2008, World Cup in 2010
• Running Projects and Local Businesses under common regional
management brings major benefits
– Share fleet, people and marketing
• We believe that on a 20-year view some of these markets (e.g.
Brazil, China, India) could be as big as N America and Europe
now are - $300m opportunity
AI’s Local Business Service Centre Network
Beijing
Dalian
Shanghai
Mexico City
Pune
Panama Manaus
Singapore
Macae
Sao Paolo Rio de Janeiro Johannesburg
Antofagasta
Santiago
Buenos Aires Melbourne
Puerto Montt
AI Local Business 2004 - 2009
£m 2004 2005 2006 2007 2008 2009
Revenues 22.5 27.6 40.6 66.0 116.3 96.8
Power Rental 83.6 65.0
TC Rental 9.1 8.8
OFA Rental - -
Services 23.6 23.0
Trading Profit 3.1 4.9 7.9 14.1 32.6 23.5
Margin % 13.8 17.8 19.5 21.4 28.0 24.4
ROCE % 19.4 26.7 28.7 33.1 46.3 25.5
AI Local Business themes & trends
• Many of our markets have premium rates of GDP growth
• China 9.9%; India 7.7%; Brazil 6.3%; Mexico 4.2%*
• “Propensity to rent” varies greatly
– high Australia, Singapore; low in China
• Competitors are localised
– A few CAT and Cummins dealers
– Many small family-owned businesses with low quality (but cheap)
equipment
• Some markets have trade barriers which impede equipment
importation
– Brazil, India
* Source: 2010 Economist forecast May 2010
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The strategy for the AI Local Business
• Build market share in more mature markets
– Australia, Singapore
• Expand footprint in economies where there are premium rates of
GDP
• Grow both organically and through acquisition
• Use Power Projects fleet to support Local Businesses
• Use Local Business presence as a shop window for Power
Projects capability
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AI Local Business Fleet
2008 2009
Generators
Average MW in fleet 578 716
Utilisation 64% 48%
Chillers
Average MW in fleet 88 101
Utilisation 40% 34%
2009 AI Local Business revenue by area
Total AI Local
2%
OtherOther, $3 Revenue £97m
Latin
Central & South America, $45 Australia Pacific, $71
America 31% Australia Pacific 49%
Asia, $26
Australia Pacific Asia Latin America Other
Asia 18%
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2009 AI Local Business revenue by sector
Total AI Local
Revenue £97m
Utilities
Others 11%
Events 7%
Shipping Military
4%
9% 6%
Contracting Oil and gas
8% 17%
Construction
8% Manufacturing
CLICK TO EDIT MASTER Mining
22%
8%
TITLE STYLE
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Australia & New Zealand
• Our largest local business, 2009 revenues US$71m
• Service centres in Brisbane, Emerald, Townsville, Northern
Territory, Newcastle, Sydney, Victoria, Adelaide, Perth,
Kalgoorlie, Karratha, Pacific and New Zealand
• Mix of small projects and day-to-day business
• Key sectors Mining, Utilities and Events
• Strong TC business
10
Singapore
• 2009 revenues US$17m
• Single service centre doubles as hub for Power Projects
business in Asia
• Key sector is Shipping
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China
• Started shortly before Beijing Olympics
• 2009 revenues $5m
• Service centre in Shanghai, sales office in Dalian
• Making steady progress; key sectors shipping, oil & gas, events
• World Expo
• Rental not a well-established concept in China, but we are
working on it!
12
India
• Entered via acquisition of Cummins Rental business in 2009
• New service centre established in Pune, and actively seeking
new locations
• Making good progress - > 60MW now on rent; good gas
opportunities
• Key sectors Oil & Gas and manufacturing
13
South Africa
• Recently-established, single depot in Midrand, Johannesburg
• Winning some business around the World Cup contract
• Focus will be on finding possible acquisitions, growing local
business and acting as a base for mining projects throughout
Southern Africa
14
Central & South America
• Transformed by acquisition of GE in late 2006
• 2005 Revenues $4m, 2009 $45m
• Mexico City, Panama, Manaus, Macae, Rio de Janiero, Sao
Paulo, Buenos Aires, Antofagasta, Santiago, Puerto Montt
• Operates in conjunction with and supports Power Projects
business
• Key sectors Oil & Gas, shipping, mining, utilities and
manufacturing
15
AI Local Business case study
Mexico
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Mexico
• Pre-2006 occasional one-off jobs via North America
• Small sub-scale business acquired from GE in 2006
– Fleet 20MVA and revenue $2m (3 people)
• Aggreko invests aggressively in the business
– 2007 fleet 45 MVA; revenue $5m
– 2009 fleet 95MVA; revenue $12m (55 people)
• Now a strong player in Mexico City with market share ~10%
• 2009 challenging year
• Swine flu brings business to a halt in Q2
• Impact of global recession
• Re-organisation of key customer Mexico City utility
• Beginning to see some signs of recovery, and planning to build out into new
areas
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Key lessons in emerging markets
• We can transform the performance of small, sub-scale businesses injecting new
fleet, processes, and application know-how
• The ability to draw on fleet and people from other businesses to support growth is
a key advantage
• Markets can go quickly into reverse – Swine Flu in Mexico, SARS in Singapore
• Key challenges are
– Finding good people with Orange blood
– Finding suitable businesses to acquire
– Implementing our key processes in small businesses
– Managing the day-to-day business, and at the same time opening new service centres
and training staff in the Aggreko processes
• We have to be patient - it takes a long time to establish new businesses
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