Snorkel on track for £63.9m turnover

Tanfield Group says it is encouraged by the improved performance of its investee company, in which it holds a 49% equity stake

Tanfield Group
Tanfield Group

Aerial work platform manufacturer, Snorkel, has increased production significantly on last year, leaving it on track to hit turnover of $100m (£63.9m) this year, according to the Newcastle-headquartered Tanfield Group, which holds 49% of the equity of the company.

In an investment update posted on the London Stock Exchange, Tanfield said the business had continued to perform well, taking advantage of the general uplift in the market for its products.

The order book had also risen substantially compared to 2013 and there had been a significant level of working capital invested into the firm, currently totalling in excess of $45m (£28.7m).

The update said: “This has meant that supplier constraints have been reduced and the spares business has improved dramatically.

“This is important in that it means that Snorkel can more effectively support its machines in the field, which was difficult last year due to cash restraints.”

Once focussed on automotive components and imaging equipment, Tanfield now concentrates on electric vehicle manufacturing and specialist engineering.

In autumn 2013, the group announced a deal to sell a stake in Snorkel to the US-based Xtreme Manufacturing, which provided the working capital required to promote growth. A new firm, Snorkel International Holdings, was also created to manage Tanfield’s stake in the business, the output of which is expected to rise to $150m (£95.8m) by 2015.

The group’s current 49% holding and its preferred interest holding amounts to $60.1m (£38.3m), representing approximately 26p per share.

The update continued: “Ahern Rental, a related company through ownership of Snorkel, has absorbed the full costs of certain Snorkel assembly and distribution centres.

“Also a number of functions have been consolidated onto one site.

“This strategic restructuring has had the benefit of extending Ahern’s reach whilst maintaining Snorkel distribution at much reduced cost.

“A number of temporary staff have been laid off to accommodate the move into the winter months when the market tends to reduce demand and the company builds stock in anticipation of increased demand in the spring.

“These actions have reduced the breakeven level of turnover of the business.”

Snorkel, the update added, was going through a process of redesigning its catalogue of equipment to increase the commonality of parts, reducing build cost and improving functionality for the end user.

The business is also undertaking an extensive program of rebuilding machines, with a 200,000 square feet centre dedicated to the purpose being established in Kansas.

Tanfield said: “The Tanfield board takes the view that the signs are very promising for Snorkel in its progress to sustainable profitability.

“Mr Don Ahern, the owner of Xtreme and Ahern Rentals has made a number of positive statements about Snorkel in trade magazine articles supporting the above update, which the board views as very encouraging.

“As a note of caution the board would point out that the market is cyclical.

“The business is moving into the winter months which are typically quieter in the industry.

“Building stock in anticipation of the upturn in spring depends upon the availability of working capital which Snorkel now seems to have at its disposal.”

The update comes a day after Tanfield announced its other investee company, Smith Electric Vehicles, was making steady progress towards its goal of public listing on a US exchange.

Tanfield now holds 5.76% of the equity of Smith, excluding warrants, amounting to just under $10.73m (£6.9m) and representing 5p per share.

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