British luxury yacht builder Princess Yachts reported a record-breaking year at a press conference in London this week, citing the highest sales level in the company’s 53-year history, a return to profitability, and advance orders totalling more than US$1bn (£750m).
According to Princess, results for the financial year ended 31 December 2017 reveal a 26.6% increase in turnover to £274.4m. The company said Operating Profit before Exceptionals reached £7.9m (2.9% of sales), representing a turnaround of £15m (6.1% points) on its 2016 results, delivering another year of growth. The geographical breakdown of sales achieved was 50% in Europe including the UK, 20% in the US, 10% in the Far East and 20% in the rest of the world.
Princess executive chairman Antony Sheriff further noted that the company has reduced stocks at dealer level from over 80 boats in January 2016 down to 20 currently. He added that 98% of 2018 production is already sold, as well as 66% of 2019 production. In 2017, Princess built 225 units and anticipates this will rise to around the 280 mark in 2018.
Employee numbers have risen from 2,000 in December 2016 to 2,700 in February 2018 and will likely increase to 2,800 in the next few months to meet the expanded production demand. The builder is also training 100 staff apprentices with good retention levels.
The company attributed its performance to an aggressive new development program that will see a total of nine model launches by year-end along with brisk order taking over the past six months at three of the industry’s premiere boat shows for motoryachts – Cannes, Fort Lauderdale and Düsseldorf.
Apart from some small emerging markets, Sheriff told IBI during the meeting that the company is now represented in all the significant boating markets with no serous gaps in its international coverage.
Princess is owned by private equity firm L Catterton, resulting from a merger of three different entities in 2016: L Capital, the private equity arm of luxury group LVMH (Louis Vuitton Moet Hennessy); Groupe Arnault, the family holding company of LVMH chairman, chief executive and principal owner Bernard Arnault; and Catterton Partners, founded in 1989 and specializing in consumer brands and packaged goods, with more than $14bn in managed assets.
L Capital acquired Princess nearly 10 years ago in June 2008 for an estimated £200m and has seen the company through the worst of the global financial crisis, injecting additional capital along the way.
Princess announced in 2016 that it would invest £100m in product development over the next three years. A bullish Sheriff stated that the rate of new launches would increase in 2019 and that the company's return on turnover would likely rise from the figure of 2.9% recorded in 2017 to somewhere just shy of a double-digit return in 2018.
One of the company’s planned launches for this year – the new R35 – is currently the subject of a national TV advertising campaign, thought to be the first by a British boatbuilder. The 35ft carbon fibre sports boat had design input from Pininfarina and will feature an active foiling system. The new model, the smallest in Princess’ portfolio for many years, will be powered by twin Volvo Penta petrol V8 engines and retail at under £500,000.