28.06.2013

Snorkel slips back

Snorkel holding company Tanfield, has reported a six percent fall in revenues and a slightly higher pre-tax loss.

Total revenues for the full year were £45.07 million, while the pre-tax loss before exceptionals edged up to £15.25 million. Cash balances dropped from £3.5 to £2.2 million on the year. The company says that in spite of its April fund raising it will need more working capital this year to continue.

It is still positive about prospects of selling the business and claims to be in serious discussions with a numbers of potential acquirers.

The results announcement said: “As we predicted, global demand for aerial work platforms continued to grow significantly throughout 2012. We were able to capitalise on this returning market after successfully raising £11 million, net of costs, in March 2012, via a share placing. In the ensuing six months we achieved monthly incremental gains in output and sales, leading to our first break-even month since 2008.”

“However, the extended cash-to-cash cycle of key markets in the Asia-Pacific region, combined with supply chain constraints put additional strain on our working capital, so we reined in production during the final quarter in order to rebalance inventory and maintain cash.”

“Global demand for our Snorkel range of aerial lifts remains strong, pricing has improved and margins increased. Customers remain engaged in fleet replacement programmes after ageing their fleets during the economic downturn. We continue to increase our distribution channels in key markets, including both Latin America and North America. Scandinavia and Japan remained particularly buoyant markets.”

Chief executive Darren Kell added: “The fleet replacement initiatives we first saw in 2011 continued into 2012, as equipment rental and plant hire companies revitalised ageing fleets of aerial work platforms. We significantly strengthened our supply chain during 2012 and achieved our first month of profitability since 2008.”

“In order to fully exploit the significant opportunities available in 2013 - and to return to sustainable profitability - Tanfield requires additional working capital, beyond the £2.1 million placing in April 2013.

Vertikal Comment

Tanfield is in a situation where it really needs to complete a sale of the Snorkel business, or look at a complete re-evaluation of what it does. It is hard to see how a company can continue and compete with such a wide product range and global manufacturing footprint with revenues of just £45 million. ($56 million).

A buyer looking to get into the aerial lift business would benefit from a well-known brand, a wide distribution network, production facilities in North America, Europe and New Zealand and a full product line. However in addition to purchasing the business, a major investment would also be required in order to take revenues up to the $250 plus level needed to compete with the likes of Genie, JLG and Haulotte and a worldwide basis.

One has to assume that any moves in this direction will occur over the summer period.