Companies: GOI   

A surprise profits warning has prompted a further drop in the share price of industrial machinery and equipment auctioneer GoIndustry-DoveBid, formed through February’s acquisition by GoIndustry of global rival DoveBid for £17m in cash and shares.

Mindful of market forecasts for the year to December ’08, chief executive John Allbrook has concluded annual pre-tax profits ‘will fall short’ of the £5.2m estimate from analysts, blaming demands placed on the business by the transformational takeover of DoveBid, the number one player in the ‘pivotal’ North American market and whose acquisition consolidated GoIndustry’s position as the pre-eminent player in valuing and auctioning off surplus industrial kit.

A slower than expected sales boost for the group, which auctions kit both through traditional asset sales as well as online, in the wake of the deal, was also to blame for the earnings alert.

However, on the positive side, Allbrook insisted strategic initiatives to fuel growth and drive efficiencies following the takeover are well underway, positioning the asset appraiser, whose clients include Pfizer and Parker Hannifin among others, for long-term profitable growth.

Moreover, while the company won’t meet analysts’ numbers, investors can still expect a substantial increase in profits in 2008 over 2007, on the back of a strong second half performance, with a further ‘significant’ profits increase predicted for 2009.

Further illumination will be provided alongside next month’s interim results from the company, which as GoIndustry more than doubled its adjusted pre-tax profits to £700,000 last year.

Despite this hiccup, shares in the company, which have slipped from a 52-week peak of 17p, remain worth holding.

GoIndustry	AIM	£12.62m	2.70p	-0.05p
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Other company articles:
Capitalising on the crunch			03/11/2008
GoIndustry-DoveBid			26/08/2008
US deal transforms GoIndustry			08/02/2008
GoIndustry			10/10/2007
James Crux’s Pick of AIM			06/10/2006