Tanfield Group has provided an update of its 49% share in Snorkel, following the sale of 51% of the business in 2013.
Based on information provided by Snorkel, Tanfield said it estimates Snorkel should achieve sales of about $120 million in 2015. This would be around 30% higher than sales in 2014, but it will still make an operating loss for the year following its investment in product development.
Tanfield shareholders will see a return on their investment if Snorkel achieves EBITDA of $25 million dollars in any of its full financial years up to 30 September 2018.
According to the statement the significant sales growth has been helped by the introduction of new products earlier in the year to meet customer needs, plus a redesign of the existing product lines. There has also been an increase in global engineering, sales and customer service teams. “In addition to this, Ahern has made a substantial investment in setting up a sales and distribution centre in Germany.
“This centre will bolster the German and mainland European sales presence. It will also ensure that the product support and customer service levels continue to be maintained at high levels throughout Europe. These combined factors are expected to significantly increase the future sales opportunities at a reduced cost to the business”.
The statement went on to say, operating costs have been reduced through the integration of the Japanese and Australian distribution centres to Ahern Rentals earlier in 2015 and a reduction in the fixed cost base of the business has been achieved by centralising functions in the newly established Las Vegas facility.
“The supply chain has been consolidated and improved to ensure adequate material stock levels are held for both production and product support to allow the business to provide high levels of customer service”.
As a result the Tanfield board expects Snorkel to achieve and sustain an operating profit in 2016 and beyond and the investment in Snorkel is well positioned to achieve a return to shareholders in the future.