The UK’s top boatbuilders have revealed financial details indicating another tough year for profitability in 2015. Princess Yachts International is the latest UK builder to share initial results for its financial year ended December 2015, reporting a loss of -£20.3m (before tax), while turnover for the year dropped 16 percent to £201.2m compared to £239.6m in 2014.
The company has not yet filed its audited accounts for 2015 so further details are not available, but in a statement released 11 October, Princess called it one of the most challenging years in the company’s history, due to “lingering effects of damage to stock, facilities and production scheduling caused by the hurricane-force storms in 2014, coupled with unfavourable sterling exchange rates, and high-margin boat models reaching the end of their life-cycle.”
Princess’ results put it just behind Sunseeker International, which comes in first for 2015 based on consolidated turnover of £202.6m (£199.5m in 2014), reported in its annual accounts filed last month. Sunseeker also made progress on its profitability during the year, but still posted a net loss (after taxes) of -£13.7m (compared to -$41.3m in 2014).
The two builders offer a similar portfolio of open, hardtop and flybridge luxury motoryachts, with Sunseeker’s range extending 40ft-155ft, while the Princess line runs from 39ft-131ft. Both have undergone significant restructuring over the past two years and have similar employment levels of about 2,100 workers.
According to Sunseeker, it has achieved significant cost savings and is predicting a return to profitability for the 2016 financial year, with contracts and deposits in hand for 81% of the 2016 order book and several model lines fully sold out. Backed by majority shareholder Dalian Wanda Group, Sunseeker increased its revolving credit facility from £30m to £50m to sustain ongoing new model development.
Princess has likewise been renewing its product line, injecting £14m into product and facility development in 2016 as part of a three-year £55m investment plan. According to yesterday’s statement, orders are at their highest levels since 2007 with record sales recorded at the Cannes Yacht Show. The company said operating profits have been positive for the last three months and plans to add 100 jobs to its current workforce.
The UK’s next largest yards are Oyster Marine and Pendennis Shipyards. Oyster, which is currently building luxury sailing yachts from 47ft-118ft at two UK locations together with refit work, generated turnover of £39.6m for 2015 (up 6%), but profitability worsened with a net loss (after taxes) -£5.7m during the year, compared to net profit of just over £300,000 for 2014.
Oyster noted its losses stemmed primarily from production disruptions and a claim stemming from Polina Star III, an 82ft sailing yacht which lost its keel and sunk off the coast of Spain in July 2015, as well as exceptional costs for the relocation of its head office to Southampton in 2015. Oyster has filed a counter claim of £7.2m against a subcontractor for Polina Star III but does not expect to know the outcome of the case until 2017. In the meantime, the builder is bullish about 2016 results, projecting an order book of at least £70 million for the end of 2016.
Pendennis, which also offers both new builds and refit work in the yacht sector, bucked the general trend among fellow UK builders, posting gains in both revenues and profitability for 2015. Turnover for the year was up 26% to £45.96m, compared to £36.86 million in 2014, with net income (after taxes) of £2.9m, up nearly 30 percent over £2.3m the previous year. In the directors report filed with its annual accounts, Pendennis noted that “trading conditions in new build and refit markets remain extremely competitive” but the builder has been successful over the past year making full use of expanded capacity at its facilities with several large refit projects.
In 2013, Fairline Boats was the UK’s third largest builder with turnover of £56.8m, but the company went into administration in December 2015. New investors bought the company’s assets at the beginning of this year and began production again as a new entity, Fairline Yachts, with 175 employees. Financial accounts for the new company are not due to be filed until 2017.