The August/September issue of IBI magazine collects feedback from key players in all major leisure marine markets for the Euro round-up 2016

IBI Euro round-up 2016With consumer confidence at an all-time low, the August/September issue of IBI looks at how European marine firms are coping in the wake of ongoing economic and political turbulence.

Austria: unstable political situation could dampen future prospects

Landlocked Austria is a small alpine country with few opportunities for boating. Apart from a limited stretch of the River Danube, there aren’t many places were powerboating is permitted.

Marine combustion engines are heavily restricted on the country’s inland lakes and rivers and in many areas are banned altogether, making electric boats and small sailing vessels a more viable option. Powerboats sold to Austrian clients are generally used abroad.

Frauscher Boats is one of Austria’s biggest shipyards, producing around 60-80 motoryachts and electric boats per year that are sold in over 20 countries.

“The domestic market is performing well, but growth is slower compared to exports because of the low volume of available berths in Austria and a general saturation of the market,” says Stefan Frauscher, joint owner of the family-run yard. “We can’t comment on the general market situation in Austria, especially as it is such a small marine market, but Frauscher’s business in Austria is stable.”

Frauscher is an Austrian success story

Frauscher is an Austrian success story

While the mood amongst Austrian consumers is generally positive, many believe that an unstable political situation could dampen the outlook.

The outcome of this year’s presidential election was annulled in May when former Green Party leader Alexander van der Bellen was voted in by less than a percentage point against Norbert Hofer of Austria’s far-right Freedom Party. A new vote will now take place on October 2.

The spillover from Brexit is another uncertainty for the Austrian leisure marine market going forward.

“Even though we don’t do business in the UK, we are worried about the ramifications with UK clients who buy internationally and EU clients who do a lot of business in the UK,” says Frauscher. “It could also hurt our Arabian and Russian clients who are usually quite active in the UK.”

Finland: Strong demand for finnish-built boats in scandinavian markets

Vene Boat Show 2016

Most Finnish yachts are built for export. Photo from Vene Boat Show 2016

Finland emerged from a three-year recession in 2015, with GDP growth of 0.5% on the back of increased private consumption and investment. But the economy is still on precarious ground. Relations with neighbouring Russia, one of Finland’s biggest export partners, remain strained and trade with Europe continues to be hampered by the ongoing eurozone crisis.

Nevertheless, Finland’s leisure marine firms appear to be holding up well. According to industry federation Finnboat, total sector turnover grew by 6.4% in 2015 to $488.4m on account of strong exports.

Domestic sales were down 4.6% to $233.7m, whereas exports climbed by 15.2% to $254.7m. As IBI went to press, analysts were widely expecting the Bank of Finland to downgrade its initial forecast of 1.4% GDP growth for 2016 on the back of Brexit. Many believe that the country is heading towards another recession.

On the domestic market, all sectors of the leisure marine industry were down in 2015 except for sales of nautical equipment and related services, which grew by 18% to $83.9m and by 2% to $28.8m respectively. Boat sales fell by 14.9% to $84.0m and wholesale engines were down 20.9% to $37m.

Speaking to IBI in mid-July, Finnboat MD Jouko Huju said the domestic market is currently on the same level as last year. “Boat registrations are 1.2% down, but we expect them to improve during the summer months,” he said.

“Demand for certain boat types, such as day-cruisers from 6m-8m, are doing better but sailboats are still at a very low level compared to the good years,” he adds. “We expect some 3,800 new boats to be registered in total this year and another 4,000 smaller boats to be sold. Sailboats will represent less than 30 of these.”

The number of boats registered in Finland grew for the third consecutive year in 2015, rising by 4.3% to reach 3,685 units. Most were small motorboats, including PWCs and inflatables. In terms of sailboats, just 21 units over 20ft in length were sold in Finland last year – two fewer than in 2014.

“New sailboat sales are still struggling,” says Huju. “There are several reasons. In a situation where the market is a bit saturated and consumer confidence is low, it is easier to install some teak deck or buy a new set of sails and go for another 10 years than buy a new boat. The younger generation also want to divide their leisure time with more varied activities. In our case, this has hurt the sailboat business the most.”

Fortunately, demand is strong for Finnish marine products in foreign markets. In 2015, the value of exported boats by Finnboat member companies grew by 19.0% to $209.1m, while marine equipment and services were up by 23.1% to $30.5m and by 318.3% to $2.3m respectively. Sales of marine engines were the only disappointment, falling by 18.4% to $12.8m. More than half of all exported engines were below 15hp, accounting for 60% of the total.

Meanwhile, new Finnboat statistics reveal that boat exports in the first three months of 2016 climbed another 18.1% to $43.2m. Around 1,493 boats worth $18.4m were exported to Norway – a rise of 14.3%. Exports to Sweden, however, soared by 46.7% with 1,075 units valued at $17.1m.

Finland exports boats to 41 countries in total, representing 70% of the industry’s production value.
“Exports, especially to Norway and Sweden, have taken a leap and we are looking at a 20% increase in the first five months of 2016,” Huju claims. “Those two countries were already strong for us last year. Russia, which used to be a good and important market for us, is down for obvious reasons.”

With 50% of all Finnboat member companies expecting turnover to increase in 2016, Huju is forecasting total industry growth of 2-3% by year-end. “Finnboat has no official view on Brexit,” Huju adds, “but I understand that with the common market possibly getting smaller it will hurt our business in the long run. My question really is, will Brexit actually happen?”

Editor’s note: This is an excerpt of the Euro round-up that appears in teh August/September issue of IBI magazine. IBI Plus subscribers can download the full report from the website.