Boats.co.uk no longer Princess Dealer

[henryf]

A number of points raised since I was last on here.

Re: selling their large 5 axis tool making milling machine. Blimey, if the one I saw was a small one then I’m impressed. It had it’s own shed !

Princess not listed on the LVMH site. My understanding was that Princess are actually owned by an investment / financial arm of LVMH. I have no idea how the company is structured but it’s always been that way when you look at the LVMH site.

Sunseeker knocking it out of the park design wise. Interestingly it was their design team who ultimately stopped us buying Sunseeker. There was too much stuff on there for design’s sake. A large bulge that tried to push you off into the sea when walking along the side of the boat, hand rails not fitted because they spoiled the visual lines, ditto cleats in convenient places. To my eye they are trying too hard, with Princess I feel it’s form following function which sits more comfortably for me personally.

The whole profit thing has always baffled me. I’ve said many times on here that I don’t understand large businesses and their accounting procedures. How Amazon can end up paying the same amount of tax as our local Co-op store is beyond me..

 

[jrudge]

Henry

You seem to be in denial. Look at companies house. Princess are in a world of pain.

Year end 31/12/20 T/o £251m, loss 18.7m, 2019 - T/O 317m loss £19m these are BEFORE exceptional costs. After exceptional they lost £25.5m and 21.2m respectively. Also within this they received £12m in job retention grants ( nothing wrong with that but without it they would be another £12m worse off.

They are actually making a gross loss - think about that ! Net loss is one thing but gross loss?

Turnover declining. Shareholder value in significant decline. Who would buy it? No idea - but there would not be many in any buyers at any price.

Prestige asset ? If that floats your boat but at what cost?

They are spending £11.5m on product development - so stop that and the still make a loss - so there is not even an immediate "stop development and we will make money" option.

They and others have established short life boat designs and constant new models. Whilst that may have its advantages making money is not one of them.

 

[Parabolica]

A number of points raised since I was last on here.

Re: selling their large 5 axis tool making milling machine. Blimey, if the one I saw was a small one then I’m impressed. It had it’s own shed !

Princess not listed on the LVMH site. My understanding was that Princess are actually owned by an investment / financial arm of LVMH. I have no idea how the company is structured but it’s always been that way when you look at the LVMH site.

Sunseeker knocking it out of the park design wise. Interestingly it was their design team who ultimately stopped us buying Sunseeker. There was too much stuff on there for design’s sake. A large bulge that tried to push you off into the sea when walking along the side of the boat, hand rails not fitted because they spoiled the visual lines, ditto cleats in convenient places. To my eye they are trying too hard, with Princess I feel it’s form following function which sits more comfortably for me personally.

The whole profit thing has always baffled me. I’ve said many times on here that I don’t understand large businesses and their accounting procedures. How Amazon can end up paying the same amount of tax as our local Co-op store is beyond me..

Regards the 5-axis Mill, yes that one. They sold it in Jan 2020 and it was big at 19m LOA but not massive. There are others in the UK more than twice the length with larger width and height capacity too.

Regarding my comment on design, that is of course just my opinion and it is subjective. I am not an experienced boater and i’ll bow to superior knowledge always but as a pure aesthetic of the stand and view package as a whole, I’ll stand by my comment.

I will however add to this whole conversation that i am myself currently trying to buy a used boat to come back into boating with and it is a Princess yacht that I want to do so in. Likely it will be 10-12yrs old, from when i feel that boats were at their most elegant and Princess the pinnacle for my budget. Again, just my opinion.

 

[henryf]

I will bow to your superior knowledge on the finances but anyone spending £11.5 million on product development isn’t just here for the short term, they obviously see a bigger picture. How they structure their costs I have no idea but they kept investing during the 2008 recession when it was said on here they, along with all the other UK builders would go out of business. Some did but not Princess.

It’s been a difficult year but order books are full and I’m sure if was necessary for a pre-sale grooming they could show healthy profits but they are looking long not short.

The 5 axis machine I saw in it’s shed was on a factory visit November of this year.

In terms of model lifespan I’m guessing they work on 5 years plus or minus? There will be a few tweaks, A 49 becomes a 50, a 68 becomes a 70 and so on but essentially it’s a very similar product. Just as I see them as form following function I also see them as evolution not revolution.

There will be some seismic changes like the X Class but they run alongside more traditional models.

Ultimately in a worldwide market they “only” have to sell 250 boats per year. Even if you call it 300 you don’t need to swamp any one market.

 

[jrudge]

Henry. You are still in denial.

Don’t get me wrong - they are nice boats - but financially it is a car crash.

Forget window dressing. They are losing huge sums and have been for years. How on earth can a manufacturer make a GROSS loss!

 

[MapisM]

Unless they don't, in reality.
I mean, Russian (and similar) clients buying boats with suitcases full of cash are not unheard of, in this industry...

Anyway, henryf likes Prin and he puts his money where his mouth is, so who are we to argue?
There's only two things I'm sure of:
1) when a business has been for sale for as long as they have been, there must be solid reasons why it didn't actually sell.
2) in this industry, there's only a handful of companies (if that!) which I would trust giving any advance payment, and Prin ain't one of them.

 

[henryf]

When was the last new boat you bought MapisM ?

I ask the question on the basis there are a lot of people who talk about things on here but who don’t actually have any skin in the game. People who get wined and dined by companies from whom they are never going to purchase from. To say there are only a handful of companies you’d buy from does rather imply you’re a buyer. This will be our third new Princess.

Clearly I don’t own and run a major manufacturing business, in fact all my businesses are cottage industry in comparison but using a bit of fag packet scribbling it struck me thus:

A boat builder loses £10 million producing 250 boats that average out at around £1.5 million each. That’s a £40,000 loss per unit so the problem doesn’t strike me as insurmountable. Would you still buy a £1,800,000 boat if it was £1,840,000 ? The answer is probably yes. Ultimately you could trim the spec to adjust back to £1.8m. Ticking the Gyro stabilisation box is essentially £100k, the audio sound upgrade package is £35,000.

Princess, like most other builders have healthy order books for 2022 which means prices are firm - ask me how I know and they’ve got a year to sell production so no immediate pressure to change things. I remember when 30% discount wasn’t unheard of. On the average £1.5 million boat that’s £450k, we only need to find £40k.

Talk of Princess being for sale doesn’t really interest me if indeed it’s being offered around, I haven’t seen it advertised in Daltons Weekly. Unlike some builders Princess are and always have been investing in model development so a new owner wouldn’t herald new designs.

 

[Portofino]

2) in this industry, there's only a handful of companies (if that!) which I would trust giving any advance payment, and Prin ain't one of them.

See post #40 and H response post #42 .

Isn’t there a way via getting more legal of securing your title to an actual piece of plastic ( with its hand lacquered doors if fitted by then ) to the hull + machinery as it passes through the line .
I seem to remember JFM personally buying his CATs marking the SN s then shipping to FL for fitting to Match # 2 .??
This meant that the receiver hands never touched them if FL went belly up ….which they eventually did.
Those motors spend weeks laying around the place .

This whole thread reeks of a smoke and mirrors exercise to cover up something.
Barkes are traders successful traders with that del boy instinct for sniffing a deal and equally a rat .Thats why they are still going .
You know what they say about rats and sinking ships ……..

 

[henryf]

Oh, and the suggestion of there being huge sacks of cash,

See post #40 and H response post #42 .

Isn’t there a way via getting more legal of securing your title to an actual piece of plastic ( with its hand lacquered doors if fitted by then ) to the hull + machinery as it passes through the line .
I seem to remember JFM personally buying his CATs marking the SN s then shipping to FL for fitting to Match # 2 .??
This meant that the receiver hands never touched them if FL went belly up ….which they eventually did.
Those motors spend weeks laying around the place .

This whole thread reeks of a smoke and mirrors exercise to cover up something.
Barkes are traders successful traders with that del boy instinct for sniffing a deal and equally a rat .Thats why they are still going .

Don’t try and make 2 and 2 equal 5. The only reason boats moved away from Princess is because they were a sub dealer to the primary sales outlet. They would never get a full seat at the table and discounts / dealer offers aren’t available because customers have bought production at retail price.

With Fairline they can and will become a primary dealer and stock deals will be available for a bit of extra bunce.

 

[Portofino]

H
Its never one thing that stands out .It’s the sum of the parts .
-Princesses time on the market for sale , no takers .
-Arnaunds bought the ex RN yard next door ( or nearby ? ) which could accommodate SY size vessels .Never used .Was it sold on ie assets striped prime real estate .
- The super dooper 5 axis CNC ….sold on .Assets striping
- Co house docs as per J rudge posts .Not encouraging .You would be naive to accept those at face value as well .
- LVH group running at arms length with the structure .At first they advertised/ associated there other brands with Priny .Now they don’t.You have to dig deep in the Luxembourg Co house equivalent
- Barkes now running a mile .
- bigger modal range dropped .

 

[Portofino]

Oh, and the suggestion of there being huge sacks of cash,

Don’t try and make 2 and 2 equal 5. The only reason boats moved away from Princess is because they were a sub dealer to the primary sales outlet. They would never get a full seat at the table and discounts / dealer offers aren’t available because customers have bought production at retail price.

With Fairline they can and will become a primary dealer and stock deals will be available for a bit of extra bunce.

Barkes have enough clout to rewrite any agreement.
You do not shoot your biggest dealers .

 

[henryf]

They were never the biggest dealers. Ultimately it was handy to bring them in because they had a relationship with Fairline customers which could easily be converted into Princess sales. Their movement away from Princess won’t affect sales figures at all. Princess Sales based in Swanwick and elsewhere are the significant dealer, boats came in as a sub dealer for them.

As for your other suggestions, are you also a 9/11 conspiracy theorist?

Princess seem to have significant assets according to their accounts from what I can see but I’m not an expert. I see no evidence of asset stripping, in fact quite the opposite, £11.5 million on new product development would be the first thing I’d ditch were things getting tight but they spent it.

Do you need a massive 5 axis machine if a very big one can do things in 2 halves? Just a thought……

 

[Hurricane]

I think I fall more on Henry's side of this argument because I've been a buyer and seen the scale of the operation in Plymouth.
@jrudge I don't understand what you mean by gross loss.
If you are "factoring in" the capital items, it is easy to get to an overall loss.
Are you saying that after the individual costs of a boat (inc the labour costs) are taken off the sales for that boat, they still make a loss. If so, I agree that isn't a great situation to be in.
That to me is gross profit/loss - i.e before overheads.
But if you start muddying the waters by adding the overheads of plant and machinery, you could be hiding some real profits.

Anyway, back to Henry.
We bought in 2007/2008 when there was financial concern.
We paid extra to get our deposits guaranteed by the bank.
Are you covering yourself with a similar approach?

 

[jrudge]

I can only say what their accounts say and that is a gross loss. So yes the direct costs of building the boat exceed the revenue. Why? That breakdown is not public. But a gross loss is a gross loss and the net loss can only get bigger !

as I said they are nice boats. Tick. The issue is the financials. I bought a s65 off Fairline when they were in trouble. I negotiated transfer of title so that every stage payment resulted in me owning the bits. In theory ( theory ) if they went bang then the bits were mine and I could head elsewhere to get it finished. In practice this is of course tricky and the receiver will not be a walk in the park to deal with.

Are they going to go bust ? Probably not - but for that to happen it assumes the long term support of their investors as the money has to come from somewhere.

Whilst I admire the £40k per unit calculation one assumes that if it were that simple princess would have done it by now !

 

[MapisM]

To say there are only a handful of companies you’d buy from does rather imply you’re a buyer

Pardon?
I said there are very few companies in this industry I would trust handing over an advance payment - unless secured, THIS was indeed implied.
And knowing Hurricane, I'm not surprised at all to read that, as an actual buyer, he also did NOT do what I said I wouldn't do
Anyhow, why on earth only a buyer should be entitled to make such evaluations?
If anything, an eager buyer is only more likely than myself to see things through rose tinted glasses, I reckon...

 

[Parabolica]

Pardon?
I said there are very few companies in this industry I would trust handing over an advance payment - unless secured, THIS was indeed implied.
And knowing Hurricane, I'm not surprised at all to read that, as an actual buyer, he also did NOT do what I said I wouldn't do
Anyhow, why on earth only a buyer should be entitled to make such evaluations?
If anything, an eager buyer is only more likely than myself to see things through rose tinted glasses, I reckon...

I personally think way too much is being read into Princesses situation on this thread. I sure the 3month lockdown in 2020 could easily explain posted losses for that financial year regardless of sny support packages taken. Additional burden would have and still will be being endured through monumental price increases to materials and bought in goods and services of course transport of which there is much of to make any boat. Factor in too, that they like all others in manufacturing will inevitably be making R&D claims which too will put a negative spin on their accounts whilst not actually reflecting the true picture that could be quite the opposite. And if a company has losses, it can of course carry those forward against profit made when it does make it, and actually keep that valuable cash by offsetting it against the banked losses.

What I’m basically saying is that i feel certain that the three brands in discussion here will all be experiencing the exact same trading conditions and weathering them almost exactly the same too. And any selling of equipment or whatever is just their business strategy currently which will have been reasoned and worked through by people far closer to the know than us on here. I feel very confident that they’ll be around for some time yet.

 

[ari]

H
Its never one thing that stands out .It’s the sum of the parts .
-Princesses time on the market for sale , no takers .
-Arnaunds bought the ex RN yard next door ( or nearby ? ) which could accommodate SY size vessels .Never used .Was it sold on ie assets striped prime real estate .
- The super dooper 5 axis CNC ….sold on .Assets striping
- Co house docs as per J rudge posts .Not encouraging .You would be naive to accept those at face value as well .
- LVH group running at arms length with the structure .At first they advertised/ associated there other brands with Priny .Now they don’t.You have to dig deep in the Luxembourg Co house equivalent
- Barkes now running a mile .
- bigger modal range dropped .

This is proper conspiracy theory stuff!

Barkes didn't 'run a mile', they were simply sub dealers 'mopping up' excess boats that PMYS weren't selling. Since PMYS can currently sell everything they can lay their hands on, why on earth would they funnel some of that stock through a sub dealer and hand over profit that they can now keep?

Pretty much any business that any investment company own is 'for sale' at the right price.

Bigger model range dropped - That's like saying that Ford must be going bust as they no longer make a Granada. The Italians own the superyacht segment of the market, just like the Germans own the executive segment of the car market. A company playing to its strengths rather than trying to compete where it struggles isn't a sign of 'going bust'.

The financial stuff, I'm not an expert on Princess Yachts' financial affairs, but crucially, neither is anyone else on here. If they're genuinely losing £40K/boat, the answer is pretty simple, and the forward order book would suggest that the market would stand it, and more, so there's clearly far more to this than the armchair experts can see.

I've said it before, but I do enjoy your theories!

 

[PowerYachtBlog]

I agree that we are looking too much into Princess, with the current ownership it is near impossible they go down, as whether we like it or not LVMH has the power of a state financially speaking and Princess is just a small .05% of it capital. Surely they made some wrong investments but who does not. For example even FG and Azimut Group did some which after 5 or 10 years have not been what they hoped for.
Still not turning a profit in all these years is not a nice sign, considering also the brand has been growing strong, and with its strategies in the 14 to 25 meters it literally vanquished the competition from the other British builders. I actually always thought that its strategy was important to shut down Fairline back in 2015. FL lack of investment and new models in the the previous 5 years did the rest.

Henry is correct though, Boats jumped ship mostly because they were a Princess sub-dealer and with current order book, and Princess not increasing production they jumped ship to Fairliine, who actually do not have an order book as full as Princess and other big brands. Returning to Fairline with D.Carter back in the helm was a security for them. Better the guy you know then that which you don't. You have to remember they worked with him for a number of years, and all the good that came from the collaboration is surely a plus for this to succeed .
The winner in all this is surely Fairline, now lets hope they have the potential to revive themselves and make what was there biggest seller for a number of years satisfied with new product which Fairline desperately needs to become relevant again.

 

[ari]

Still not turning a profit in all these years is not a nice sign, considering also the brand has been growing strong, and with its strategies in the 14 to 25 meters it literally vanquished the competition from the other British builders. I actually always thought that its strategy was important to shut down Fairline back in 2015. FL lack of investment and new models in the the previous 5 years did the rest.

I suspect that the problem isn't other British builders, it's the French ones. Princess used to make an entire range of boats between 26ft and 45ft back in the Eighties. 266R, 286R, 36R, 46R, 315, 330, 35, 388, 415, 45. Then along came the French with mass production and did what they did to sailboat builders Moody and Westerly, built superficially similar products that did the same job for most people at a much cheaper price. Yes, the quality wasn't anything like, but if it meant you could have a 40 footer instead of a 35 footer for the same money, many (most?) were prepared to compromise quality for space and facilities.

It wiped out the UK sailboat industry, but the motorboat builders took flight upmarket, dumping anything under 40ft and building their model range on up to 60ft then 70ft and up and up.

Then the Jeanneau launched Prestige and Beneteau the Beneteau MC models (not to mention Monte Carlo Yachts) and the squeeze started again. The trouble is, there's a ceiling of how big you can go, and Princess dropping everything above the X95 suggests they've found it. With Prestige now at 70ft, that window is looking increasingly narrow.

That's not to say that there isn't a market for better quality, more expensive boats, or indeed an argument that those higher quality boats hold their value and are as cheap or cheaper once you factor in depreciation. But it's got to be putting a squeeze on the market and a ceiling on the premium that can be charged for the increased quality.

 

[PowerYachtBlog]

Ari from a certain point of view the British and more other main stream builders (think Azimut) did the same to semi-custom builders.

Upwards of 24 meters serious buyers used to go to Canados, Posillipo, Sanlorenzo, Cantieri di Pisa, Tecnomar, Alalunga, Maiora, Falcon, Mangusta or Leopard if you wanted open, and Baglietto or Lavagna Admiral if you wanted alloy.
You used to go to these yards and possibly have the build tailored around you.
In came Princess and Sunseeker and Azimut with there half priced production boats and all these builders are today building north of thirty meters with some exceptions.
That is an around 2000-10.

So the World does turn around....