01.07.2008

Tanfield issues downbeat trading statement

Tanfield, the owner of UpRight and Snorkel brands of aerial work platforms issued its half year trading statement this morning.

Revenues were up 147 percent compared to the same period last year to £91 million ($180 million) while like for like revenues (without Snorkel) increased by a credible 36 percent...

The company says that while the first half has been strong overall, it has seen a marked slow down in June, with around 200 machines remaining unshipped due to credit issues and a further £3 million worth of orders being cancelled while others have been rescheduled forward, some into 2009.

As a result the company has changed its overall strategy from one of aggressive growth towards a “more prudent and conservative approach with more moderate growth and a greater focus on cash generation."

As a result of these changes Tanfield has announced that it will not now meet its original forecasts for 2008, which it says were set when the market was in a very different state than it is currently.

In addition to the challenges on the revenue side, the company is also experiencing strong inflationary pressure on raw materials which will significantly increase its costs. Some of this has, it says been defrayed by its programme to bring in materials from China, but it also plans to reduce work in progress and inventories, while looking at headcount reductions.

Vertikal Comment

With all our staff attending new product launches and other events we have had little opportunity to digest this trading report properly and consider its content.

Overall the results are not surprising, Tanfield will have been hit by actions such as Lavendon’s large order cancellations following its acquisition of The Platform Company and DK Rental, which freed up a lot of other manufacturer’s equipment overnight leading to steeply discounted prices to clear inventory.

It is also evident that news of this downbeat statement reached some investors ears before today, leading to the company’s share collapse last week which has continued this morning.