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Tanfield Joint Venture Sales Rise; Snorkel Stake Future Talks Continue

(Alliance News) - Investment firm Tanfield Group PLC said Friday its joint venture firm Snorkel ...

Alliance News 16 August, 2019 | 5:36PM
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(Alliance News) - Investment firm Tanfield Group PLC said Friday its joint venture firm Snorkel International Holdings LLC saw a sharp rise in sales in the second quarter of 2019, as it continued to discuss the future of its holding in the firm.

Tanfield - which holds a 49% stake in Snorkel - formed the joint venture with Xtreme Manufacturing LLC in 2013.

For the three months ended June, net sales jumped 17% to USD60.8 million from USD51.8 million the year prior. For 2019 to-date, net sales rose 17% to USD112.4 million from USD96.3 million the year before.

Tanfield also noted that gross profit margin improved to 13.0% in the second quarter of 2019, higher than the 12.4% reported in 2018 as a whole. This was a striking improved on the 11.4% margins reported in the first quarter of 2019.

Tanfield explained it had been told by Snorkel that it was "likely" the reduced margin in the first quarter would "continue" into subsequent periods. Consequently, Tanfield said it was "happy to see that this does not appear to be the case and welcomes the increased margin this quarter".

"However, due to this volatility the board is unable to provide an opinion at this juncture on the gross profit margin expectation for the remainder of 2019," Tanfield added.

As a result, Tanfield described itself as "of the opinion that growth in sales may continue in 2019 but it is unable to give an opinion on operating profitability".

Tanfield explained discussions were still "ongoing" regarding the call option notice given by Xtreme related to the stake held by Tanfield. In November, Xtreme sought to exercise its call option over the Tanfield stake at a price of USD0.00.

Tanfield continues to oppose this assertion, believing that preferntial interest is still due to be paid by Xtreme and thus that the call option exercise in invalid.

In September 2018, Tanfield impaired its Snorkel investment value to GBP19.1 million from GBP36.3 million prior.

Shares in Tanfield closed 9.0% higher at 7.25 pence in London on Friday.

By Ahren Lester; ahrenlester@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Tanfield Group PLC 5.73 GBX 7.01 -

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