Companies: AI.   

Aero Inventory, the provider of e-based procurement and inventory management solutions to the aerospace industry, reported a dramatic drop in interim profits and warned full year profits will be 'well below' expectations thanks to 'timing issues'. Annual profits to June will be pegged back by a slower than expected build-up in sales from existing contracts and the weak US dollar, in which it mostly buys and sells parts. Also, there will be no contribution from 'potentially substantial' FLS Aerospace business before the beginning of the next financial year. FLS Aerospace is being acquired by SR Technics, the major aircraft maintenance repair and overhaul company with which Aero has a major new deal. In the half to December, pre-tax profits plumetted from £1.54m to £562,000 despite an 8% rise in sales to £7.8m. The numbers were hit by the after-effects of SARS, higher overhead and start-up costs on new contracts, and just a one-month contribution from the SR Technics deal in the half. Thanks to a £15.1m institutional placing at 375p in October, net debt fell to £1.63m (£3.4m a year earlier), and the company has increased its debt facility so it can take on more business without tapping the market again. There was some uneqivocal good news though - Êthe group announced a contract with Abu Dhabi-based Gulf Aircraft Maintenance Company (GAMCO). We first recommended this company in January 2002 at 279p. Now is a good time to lock in a profit if you haven't already.