November 1, 2011 / 5:24 PM / in 6 years

Ritchie Bros cautious on used equipment market

(Reuters) - Ritchie Bros Auctioneers Inc (RBA.TO) RBA.N posted a third-quarter profit that came in way below market estimates and said it remains cautious about the used equipment market in 2012, sending its shares down 8 percent to a 15-month low.

The company, which sells trucks and other equipment used in the construction, agricultural and mining industries, has been facing competition from brokers and dealers even as its customers delayed selling decisions.

The company, which rescheduled a number of auctions in the third quarter, said economic uncertainty affected confidence levels of its customers particularly in the United States and western Europe.

Ritchie Bros, which auctions Caterpillar (CAT.N), Komatsu (6301.T), Manitowoc (MTW.N) and Liebherr trucks and cranes, however, said its fourth quarter is shaping up well.

Despite the weak third quarter, the company maintained its outlook for the full year. It still expects 2011 gross auction proceeds of $3.4-$3.8 billion and said it is tracking toward the top half of that range.

For 2012, it sees capital expenditure of $50-$60 million, lower than its 2011 forecast of $70-$80 million.

Ritchie Bros, which began more than half a century ago as a family-run business in British Columbia, earns around half its revenue in the United States and a quarter in Canada. It also has auction sites in Europe, the Middle East and Asia.

Other companies offering similar services include IronPlanet, Great American Group, GoIndustry, Hilco Industrial, Alex Lyons & Son and Dubai’s World Wide Auctioneers.

The company’s third-quarter profit halved to $6.5 million, or 6 cents a share, lagging analysts’ average expectation of 14 cents a share, according to Thomson Reuters I/B/E/S.

The results were hurt by a slowdown in the used equipment market. The company, however, said pricing for late model equipment remains firm.

Auction revenue was down 3 percent at $79.7 million, while gross auction proceeds fell 10 percent to $673.4 million.

Auction revenue rate -- which is auction revenue as a percentage of gross auction proceeds -- rose to 11.84 percent from 10.95 percent.

The Vancouver, British Columbia-based company’s new fee structure, which came into effect in July, contributed $9 million to auction revenue in the quarter.

Ritchie Bros’ shares, which have lost a third of its value in the last six months, were up 25 Canadian cents at C$20.09 on Tuesday afternoon on the Toronto Stock Exchange. They earlier touched a low of C$18.22.

Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Don Sebastian

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