Snorkel’s Parent to Raise $20M on Stock Market to Increase AWP Production
As the aerial work platform market demand continues to recover, the global industry is driven by the need for replacement vehicles. However, the increased demand has created bottlenecks for a number of manufacturers as the supply chain struggles to restore the capacity lost during the protracted downturn.
To alleviate setbacks caused by the supply chain, Snorkel’s parent company, Tanfield Group Plc, announced yesterday it has conditionally raised gross proceeds of approximately £12 million ($19 million) by way of a placing of 29,268,293 new ordinary shares of 5p each at a price of 41p per share on the stock market.
During the first half of 2011, the company’s turnover rose 25 percent to £24.6 million ($39.12 million) while the outstanding order book rose 170 percent to £20.9 million ($33.24 million). According to Tanfield, company management is working hard to resolve the supply chain issues and bring orders through to sales at a faster rate. In some cases, however, additional volume commitments and other incentives are required in order to prime the supply chain and accelerate delivery of particular parts. The company’s need to come up with scarce working capital resources has limited its ability to make such commitments and capitalize fully on the growth opportunities available.
Darren Kell, CEO of Tanfield, said: “The additional working capital raised by this placing will help to alleviate the bottlenecks within our supply chain allowing us to increase throughput, reduce lead times for customers and generate purchasing efficiencies. As a result, we believe it should accelerate our return to profitability and help to cement our position as one of the leading global manufacturers in the aerial work platform industry.”
Shorter supplier lead times will allow the company to take advantage of rising customer order books. Directors currently estimate that the company would break even at an operating profit level on annual revenues of approximately £90 million ($143.13 million).