30.09.2009

Tanfield access drops 70%

The access business of Tanfield – UpRight and Snorkel – has reported first half revenues of £21.2 million, down 70 percent on last year. On a more positive note the business generated a loss of £8.1 million compared to a loss of £67 million last year.

The group as a whole which includes electric vehicles and engineering reported revenues of just under £30 million, down 68 percent on 2008. The pre tax loss was £11.4 million compared to a loss of £65.2 million last year. (The 2008 operating profit – prior to exceptionals – was £10.3 million compared to an £11 million loss this year)

The group has cut its workforce by 40 percent and is still debt free and is sitting on a more than £10 million of cash and expects the second half of the year to be similar to the first half.

Talking of the access equipment market the company says that the suspension of fleet purchases by rental companies that began in late 2008 has continued throughout the first half, fueling increased competition for the end user market, resulting in heavy discounting.

It believes that the short term outlook for powered access will remain challenging as major rental companies ‘de-fleet’. It does not expect to see an improvement before the end of 2010.

It is more optimistic about the electric vehicle market even though it has suffered along with the commercial vehicle market as a whole.

Darren Kell, Tanfield’s chief executive said: "Sales performance across the Group continues to be constrained by the global recessionary environment. However, we took appropriate and timely corrective action to reshape the business. Throughout the period we have consciously run the Company for cash ahead of profitability; a strategy that has maintained the cash position, with the group still retaining a strong balance sheet.”

"We continue to prepare for an eventual upturn in market demand in both our core business sectors, and are already witnessing positive developments in the Zero Emission Vehicles division."

Demerger plans

Tanfield says that it is considering the pros and cons of de-merging its two core trading divisions, to create separate Powered Access and Zero Emission Vehicle companies.

It says that the board of directors is currently reviewing how this might improve shareholder value, whilst providing sustained growth opportunities in each of the business units.

Vertikal Comment

This result is in line with most full line self propelled aerial lift manufacturers, the operating loss for the access business is better than most, (or should it be not as bad as most?) but this is more due to the fact that Tanfield took its restructuring costs and write downs last year rather than this.

The company is unusual in that it is now a small company in terms of revenue and management layers, but still has production facilities on three continents while its products are produced on four.

It is benefiting now from its independent distribution network which it is continuing to expand, but it could struggle to win a decent share of the large rental company business when they start spending again in 12 to 18 months time.

It might have an opportunity later on in the recovery when demand has soaked up inventory and the industry’s reduced production capacity becomes stretched. It has the potential to ramp production up faster than the larger manufacturers thanks to the facilities it has retained, the size of its management team and the fact that it has no debt.