19.08.2010

Tanfield slips 6% but cuts losses

Tanfield, owner of Snorkel (UpRight) aerial lifts has published its half year trading statement which shows revenues slipped six percent compared to the same quarter last year to £28.1 million - roughly the same as the second half 2009.

Access related revenues were £18.5 million, down 12.5 percent on the same period last year. The access division posted an operating loss of £6.6 million for the six months, compared to a loss for the furst half of 2009 of £8.1 million.

The company achieved an overall pre-tax loss of £9.97 million, compared to a loss last year of £just over £11 million and a loss in the second half of 2009 of £10.4 million.

The company’s cash pile continues to shrink and was down to £2.2 million at the end of June compared to £5.4 million at the end of December and £10.8 million at the same time last year.

The company says that growth has returned to its electric vehicles division, with sales up four percent to £.4 million. It adds that it has also picked up initial signs of stability in the powered access market.

The company is still looking to raise funds from the sale a stake in its electric vehicle business, and is now looking to merge its UK and US operations in preparation for a possible floatation in the spring. In the meantime it is reviewing alternative near-term funding possibilities.

Chief executive Darren Kell, said: "Both of the principal business units performed in line with our expectations, during another extremely challenging period for the global economy. We maintained tight control of cash and moved closer towards a break-even position, while still retaining all our core people and skills. Tanfield continues to leverage its status as the world leader in commercial electric vehicles, while we are also seeing signs that the global market for aerial lifts is stabilising, albeit at very low levels."

Vertikal Comment

Tanfield’s access division is unusual in that it carries a major international structure for what is now a relatively small business in terms of revenues compared to its four largest competitors.

It’s rebranding under the Snorkel name makes sense on a global basis and will set it up for cleaner simpler marketing and production, ready for when the market turns up.

The groups challenge though has, as with many companies, to be cash. It has burnt through around £8 million in the past 12 months and while its losses are falling and it has taken a hit cleaning up its debtors, it is still likely to be consuming cash at a rate of around £4 to £6 million a year, which means that it would exhaust its cash pile early in the new year.

However the company says that it is seeing some improvements in the access market or at least stability and it will have some further cost reductions coming through. It is also almost debt free so should be able to raise short term funds to tide it over until the sale or flotation of its Electric vehicle business is completed as planned during the first quarter 2011.

The powered access market will undoubtedly make a strong recovery within the next two to three years – the longer it takes the stronger it will be- If Tanfield continues to work on its branding, its product support and its core products, it should reap the benefits as a lack of capacity boosts revenues and prices once the recovery takes hold.

It just needs to ensure that it has the funding to take it through to that point and it has a couple of reasonable options to achieve that, alternatively it might also be a decent take-over target for someone looking to profit from the eventual upturn.