Aggreko has a lot to grapple with

Aggreko, the power equipment rental company, is trying to regroup after a truly grim 12 months which included the death of its chief executive, Phil Harrower, and two profits warnings.

The new CEO, Rupert Soames, may only be eight weeks into the job but he yesterday announced a full strategic review to assess where the company goes from here. This will report in the first quarter of next year and is likely to focus on which markets the company operates in after a series of setbacks in the United States.

The strategic review announcement seemed to boost the shares which had already enjoyed a flurry of excitement as a result of the power blackouts in the US and the heatwave in Europe which helped Aggreko's air conditioning systems.

But the company was at pains to point out yesterday that while those shortages lead to an increase in power equipment rental, it was short-lived as the outages only lasted for a week.

It was not enough, the company said, to change the underlying outlook which remains poor. Part of this is due to the after-effects of the last American power shortages which hit California a couple of years ago. Those led to a huge increase in the manufacture of power equipment, much of which is still flooding the market and putting pressure on rental rates.

These factors scarred Aggreko's half-year results yesterday which showed a 32 per cent slump in profits to £17.2m. The results were further hit by the Salt Lake City Winter Olympics contract which yielded £12m of revenue in the same half last year. Aggreko has other high-profile contracts such as the World Athletic Championships currently taking place in Paris, though this is a far smaller contract. It is also bidding for the contract to provide power and ventilation equipment to the Athens Olympics next year.

The shares rose 9p to 159p yesterday, and, assuming full-year profits of £40m, that puts them on a forward p/e of 16. That looks a bit high for a company with some major strategic issues to grapple with. Avoid.

Bodycote looking more confident

The metal basher Bodycote has been bashed about quite a bit in the past 18 months. Falling demand from the beleaguered manufacturing industry it serves has led the company to seek "self help" in the form of a major cost-cutting programme.

In all 1,000 jobs have gone in the past two-and-a-half years, with another 100 still to go. The company, which coats and tests metals for the aerospace, automotive and power-generating industries, says manufacturing demand is not expected to recover until 2004. In the case of the commercial aviation sector, the forecast is for 2006. Bodycote reckons this will force rivals to merge or exit the heat-treatment market with Bodycote poised to pick up the slack.

There is some hope that the power blackouts in the US and talk of shortages in the UK this coming winter, might boost demand, though no one is getting carried away. But Bodycote sounds more confident than a year ago, during which time the shares have doubled.

As well as a hoped-for economic upturn, Bodycote also hopes to encourage more companies to outsource the kind of precision engineering Bodycote specialises in.

Yesterday's half-year results showed that profits rose to £10.7m from £6.8m. Shares fell 5.5p to 156p, close to Dresdner Kleinwort Benson's target of 160p. The outlook looks better after more than two years of restructuring. The company looks to be on a more solid footing; investors may have missed the best of the bounce. Hold.

James Fisher offers growth still to come

James Fisher's strategy of going after higher value marine support services - in an effort to cast off its shipping company label in favour of a services company tag - continues to pay off.

Its marine support services division carries out various tasks for the MoD, including providing the Royal Navy with a UK submarine rescue service. Other big customers include British Nuclear Fuels.

The company has made considerable progress in turning itself around. It now gets about 39 per cent of its profits from the services unit, up from about 17 per cent a year before.

The balance comes mainly from its tankships business, where it delivers fuel to the major oil companies, and it also has a cable-laying business - which lays undersea cables for telecoms companies - although that business is not really considered a core operation for the long term.

James Fisher's pre-tax profits in the six months to 30 June were 11 per cent higher, before accounting for losses on the sale of two ships. The company is bullish on its prospects for the rest of the year. It is particularly optimistic about marine services, which it believes will be its biggest division before long.

The company's broker, Evolution Beeson Gregory, yesterday raised its profit forecast for the year to £11m, which puts the stock on a rating of 9.2 times.

The shares, down 2.9 per cent at 199p, have already had an extremely good run since the start of the year. But as the services story builds, there is probably more to come. Buy.