11.11.2013

Ritchie doubles profits

Auctioneers Ritchie Bros has boosted its revenues and profits on slightly lower gross auction proceeds.

Looking first of at the nine months to the end of September, gross auction revenues were down just under seven percent to $2.7 billion. The company achieved revenues on this of $336.2 million an increase of just under four percent. Pre-tax profits were up over eight percent at $87.3 million.

Moving on to the third quarter, gross auction proceeds were also down seven percent, largely due to timing and a large one off consignment of equipment in the third quarter last year. Revenue from the business were up almost 15 percent to $105.8 million. Pre tax profits for the quarter more than doubled to $25.6 million. The change is due mostly to a significant shift away from the ‘At Risk’ business, which is comprised of guarantee and purchase contracts. Last year it represented 34 percent of gross auction proceeds, while this year it was just 29 percent.

Chief executive Peter Blake said: “I am proud of our third quarter results and the great work of our teams worldwide. Our focus remains squarely on growing revenue. The strong performance of our underwritten business helped to bolster our Auction Revenue Rate to its highest level ever, driving meaningful revenue and earnings growth this quarter. We’re also pleased with the progress of our new Territory Managers, who have been aided by on-going training and new sales support tools. These developments, along with signals of a stronger market and supply environment reinforce our belief that the company is very well positioned for growth.”

Vertikal Comment

With good quality used equipment now in short supply prices are on the rise and this shows up best at equipment auctions. This may well help Ritchie as more companies decide to sell their second hand machines via auction.

Ritchie is now selling 36 percent of the equipment that passes through its books to online bidders with around half of all bidders now registering online, all of which helps with obtaining the best prices for equipment, which can help the company grow.