Electric vehicle manufacturer Tanfield has seen sales at Snorkel, its joint-venture with heavy equipment and construction machinery firm Xtreme Manufacturing, increase 60% in the fourth quarter of the last trading year after reducing material cost bills, resulting in an increase in its gross margin for much of the year.
Snorkel's sales came to $41.7m for the three months ended 30 December, up from the $26.2m it posted a year earlier, helping the group narrow operating losses 44% to $1m.

Snorkel reported full-year sales of $165.8m, an increase of 27% year-on-year and swung to an operating profit, excluding depreciation, of $1.6m, a significant turnaround from 2016's $2.8m loss.

The self-propelled aerial work platform manufacturer managed to cut material costs throughout the first half, resulting in increased gross margin levels, which continued into the third quarter, taking its average gross margin percentage for the nine-month period ending 30 September 2017 to 13.2%.

However, Snorkel's gross margin dropped by 2.3% to 10.9% in the fourth quarter, the impact of which resulted in its operating profit being approximately $1m lower than what it would have been if it had managed to remain in line with the first three quarters of the trading year.

Elsewhere, selling, general and administrative costs for the first three quarters of $4.4m, $4.7m and $4.7m grew to $5.5m in the fourth.

Tanfield added that, while it understands the global AWP market was expected to see growth again in 2018 and beyond, it was "currently of the opinion that the investment in Snorkel will result in a return to shareholders in the future", but noted that at the current rate of growth, it did not believe it would materialise until after 30 September 2018, when "the outcome becomes uncertain and could, therefore, be less than the current carrying value."

As of 1200 BST, shares had dropped 6.175 to 11.40p.

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