07.05.2010

Snorkel/UpRight drops 63%

Tanfield, owner of Snorkel (UpRIght) has issued its preliminary results for the full year to the end of December 2009.

UpRight/Snorkel revenues for the year were £42 million ($63 million) a fall of 63 percent on 2008. The group’s electric vehicle business posted revenues of £15 million a fall of 40 percent.

The significant fall in revenues caused the group to post a pre-tax loss of £22.4 compared to a loss of $88.8 million in 2008 when the company booked a large restructuring cost and wrote down/off goodwill.

The group’s cash position declined from £11.1 million at the end of 2008 to £5.4 million at the end of 2009.

Tanfield says that it sold off excess inventory during 2009 and machine inventory is now within its target levels. It also adds “The overall sector outlook remains challenging, with no sign of any industry improvement in 2010. Depressed demand continues, particularly in North America and Europe”. It does add that it expects 2011 to start showing more solid improvement.

Chief executive Darren Kell said: “Throughout 2009, both our core business units continued to be adversely impacted by the global economic downturn. In particular, the lack of access to credit continued to inhibit our customers in the Zero Emission Vehicles and Powered Access divisions.”

“We acted decisively at the start of 2009, implementing headcount reductions coupled with initiatives including shorter working weeks and periods of unpaid leave. This resulted in a reduction of staff costs by 42 percent, while preserving the core skills base of the workforce.”

“Our strategy remains to focus on cash generation ahead of profitability and to retain the employees and skills that we will need to build for future success.
On the 10th of March the company announced that it had received a non-binding, conditional offer from Smith Electric Vehicles US Inc ("SEVUS") for the Company's Smith Electric Vehicle division. The Board granted a 4 month period of exclusivity to SEVUS to finalise this offer and understands that progress is being made in line with the proposed offer timeline and key milestones.

Tanfield chairman Jon Pither added: "As we predicted, 2009 was a tough year for the group and we expect 2010 will also be challenging.

"The management team has executed a plan to sustain the business during the economic recession and to prepare it for the eventual upturn. We continue to prudently manage cash and implement cost reduction programmes, while retaining core employee skills and competencies.

"Discussions with SEVUS are continuing and we understand that progress is being made in line with the proposed offer timelines. Nevertheless, with a stable balance sheet and clear strategies to manage the downturn, I believe the Group is well positioned for long term success."

Vertikal Comment

There are no real surprises here Snorkel/UpRight has performed as well as most of its major full line competitors – better than some. While it is a lean operation in many respects it does carry a large production footprint for its size, with facilities in the UK, USA, New Zealand and China and a very full product line.

However its borrowings are low and it has cash in the bank, while it is not indicating anything positive for 2010, it is likely that it will at least be better than 2009 thanks to new products and an improving market in some areas. Everything will change if and when its sale of the electric vehicle division is concluded, this will bring in solids cash injection, some of which might be used to take advantage of any opportunities that are thrown up during the recovery.

When the access market does start to gain momentum it is likely to throw up a shortage of capacity, at least in the short term, if Snorkel can ramp up quickly it is likely to make some significant gains in market position, not to mention profitability.