Fairline posts £17m loss for 2008
By IBI Magazine
Fairline has reported a £17.4m loss on sales of £91.8m for the year ended December 31, 2008, according to recently filed financial accounts, plunging the UK boatbuilder in to the red for the first time in its 40-year history. That compares to sales of £130.2m and a profit of £9.7m for 2007, reflecting the full impact of the global economic downturn on the Northamptonshire-based enterprise.
Talking exclusively to IBI, managing director Derek Carter said that the poor financials were the cumulative result of drastic cost-reduction measures taken in 2008 in the face of falling demand.
"In the middle of 2008 we started to note that the metrics were beginning to go the wrong way from a market point of view. In July 2008 we took the decision to cut back production rates by about 10 per cent. Still the metrics kept going the wrong way so we waited for the end of the Southampton boat show, during which time Lehman brothers went belly up. It was then we realised only one thing to do — that was to cut back dramatically."
Last September, in the teeth of the recession, Carter says management took the decision to downsize the business by approximately 40 per cent. "From the end of September to December 2008 we took an enormous bath in terms of costs and disruption in downsizing the business. We said goodbye to 400 people."
The cuts have been deep. As well as the redundancies (which cost the builder approximately £2m), it was also forced to write off £2m-worth of tooling as it sought to consolidate its model line-up by taking its Targa 52, Targa 64, Phantom 40 and Squadron 58 out of production, as well as moth-balling four production lines.
"We reduced overhead costs by £9m — we took steps to incentivise the inventories that were in the dealerships globally which cost millions, not to mention the disruption of 400 people being on our books that weren't being productive."
Summing up, Carter said the boatbuilder had been to "hell and back" over the past 12 months, but that losses for 2008 would be followed by modest profit in 2009 and relatively substantial profits in 2010.
(6 November 2009)
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