Tanfield

Severely punished after warning on profits and slamming the breaks on its growth plans, Tanfield, the electric vehicles and aerial platforms manufacturer, has careened to a three-year low.

With an already gloomy macroeconomic environment taking a sharp downswing in June, Tanfield witnessed markedly reduced demand from customers for its powered access division. This arm, which makes boom lifts and cherry pickers and is projected to account for 75% of revenues, has quickly been rationalised, with cuts to staff, inventory and expansion plans.

Less hard hit, the electric vehicles division has nevertheless been frustrated by supplier issues, meaning 112 fewer vehicles were delivered during the second quarter than was hoped, and rising input costs. Forecast sales of electric vehicles are now lower than current market expectations, and although enquiry levels ‘are buoyant’, these are not expected to convert quickly to sales.

Management has been quick to react to this downswing, which was partially foreshadowed by a similar warning from US competitor OshKosh, and a ‘more prudent and conservative approach’ has been adopted.

2007 results released in April showed a record US customer backlog of $111m, after the company had delivered £11.9m profit before tax on £123m sales. House broker Cenkos has slashed its 2008 and 2009 earnings forecasts by more than half to 3.3p and 3.5p respectively.

In light of the strong and continuing rise in the price of oil, Tanfield's electric vehicles division remains an attractive proposition in the medium and long term, something that may attract more plucky punters. Most should avoid for now.

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