Tanfield reports flat 2010

Preliminary 2010 end of year results for the Tanfield Group, owner of Snorkel, show a very slight improvement over 2009, but nothing remarkable. Turnover increased from £43.1 million in 2009 to £43.5 million in 2010 (less than 1%) and operating loss before impairments decreased from £16 million in 2009 to £15.8 million in 2010. However, turnover in the powered access division fell marginally from £41.7 million in 2009 to £41 million in 2010.

Net cash fell from £5.4 million on 31 December 2009 to £3.6 million in 2010, although on 1 April 2011 net cash stood at £4.8 million.

Jon Pither, chairman of Tanfield said in his statement, "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."

Chief executive officer 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."

The company is positive about the outlook for 2011 expecting a gradual return of the market, Mr Pither said, "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."

The company reported that Snorkel's order intake substantially increased in the first quarter of 2011, indicating that a recovery may be underway, albeit from very low levels. At this point Tanfield believes it is too early to say whether the current levels will be sustained as it is likely that some of the recent orders contain some short term replenishment of inventory at dealers.

Like many manufacturers Tanfield is conscious that the prolonged recession has severely impacted its supply chain's capabilities to react and ramp up production and predicts that this will restrict the pace of its growth during 2011.

"We therefore see this year as one of transition, where we grow sales and move closer towards profitability. Having preserved our debt capacity for this eventual recovery, we are now examining the potential to introduce some debt into the business to help finance our return to growth."

The company will not being paying a dividend for this period, preferring to focus on working capital optimization. The directors believe that the business remains well positioned, "It has a stable balance sheet bolstered by the sale of Smith Electric Vehicles with cash and un-utilised debt capacity to finance future growth and a return to profitability."