05.04.2011

Tanfield turns the corner

Tanfield owner of Snorkel has reported a slight improvement in revenues and profitability for 2010, with a strong pick up at the start of 2011.

Revenues for the full year were £43.5 million an increase of just under one percent on 2009, of this £41 million was from the access division down marginally on 2009, with the balance coming from engineering work. Electric vehicles are not included – following its sale and classification as a discontinued operation.

During the period the company made a £16.66 million loss, slightly better than the 16.93 million pre-tax loss in 2009. £15.5 million of the loss was attributed to the access division.

Cash at the end of the year was £3.6 million, compared to £5.4 million at the end of 2009, however by the end of April this had improved to £4.8 million.

Order intake in the first quarter of the year was also well up – increasing the order book over 250 percent to £7.7 million compared to the same time last year. The company sees 2011 as an improving ‘transition year’, with curbs on growth coming from the inability of component and other material suppliers to ramp up fast enough to meet potential demand.

“Chief executive Darren Kell said: “During 2010, the paucity of access to credit, allied to a depressed demand, continued to prevent many of our customers from investing in new aerial lifts. Turnover remained stable at £43.5m, resulting in a loss from continuing operations before impairment of £15.9m for the year; virtually echoing our performance in 2009.”

“Following the actions we implemented in 2009 to reduce our cost base, we focused on cash generation ahead of profitability, whilst preserving our debt capacity for the eventual market recovery, thereby preserving the core skills of our workforce and maintaining the best possible operational position for that recovery.”

Jon Pither chairman added: “2010 was equally as challenging as 2009, with no material improvement in demand for aerial work platforms. However we have since successfully completed the sale of Smith Electric Vehicles, to our associate company Smith Electric Vehicles US, which has positively impacted on our net cash position and we remain debt-free.”

“We have stuck to our guns in terms of preserving our people and core skills for the longer term recovery, rather than chasing inappropriate short term reductions in overhead, and we continue to enhance and expand the Snorkel product range and distribution channels.”

“As the market for aerial lifts is now beginning to return to growth, we expect that 2011 will be a transitional year, where we move closer to a break-even position. With a healthy cash balance and no debt, I believe Tanfield is on the right path to recovery and a secure future.”

Vertikal Comment

With a trading statement earlier in the year this result is no surprise, the pick-up in order intake is yet another positive sing that the aerial lift industry is beginning to bounce back and that if all goes well 2012 will be the year that growth starts to flow through to a decent level of profitability again.

Tanfield / Snorkel is unusual in that in revenue terms it is a small player, and yet it has a very full product line and manufacturing facilities on each continent. It has the ingredients to be one of the top three but faces some strong competition keep it where it is.

The next year or two will depend very much on each manufacturer’s ability to ramp up as well as ability to persuade buyers to switch to them if their preferred manufacturer cannot supply. Interesting times.