Fairline - any news?

ari said:
I think the point was that there is no 'classic' market like there is for cars.
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Yep, understood.
That was covered - in my intention at least - by the statement "actually, I understand your point also re. secondhand market" in my previous post... :)
 
dom said:
Stuff about how the return on bonds isn't what it used to be
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But not everyone earns their money buying German bunds, presumably their version of an English bond?

What about all those people who do boring stuff like run cleaning, medical research, IT, recruitment, travel and leisure, sales related, design and so the list goes on companies.

Hell, if things are so bad then liquidation and asset stripping businesses.

Then there are all the legal and accounting people - some local to these parts, and all the myriad of other entrepreneurial odd bods.

So boat builders won't be selling to people who have a couple of million Euros to their name and who buy bonds. As it happens your 5% yield sounds dire compared to my best commercial property which is happily churning out 15% with a large multi-million pound national car retailer sitting in it. You would need a bloody big pot of gold to be buying new boats at a 5% yield.

Boats are sold to people who hit lucky in their endeavours, not to your average Joe. Certainly not the sort of boat bought new from the builders we are talking about.

When in Monaco the other day I didn't see a deluge of bargain basement property for sale. Anything big enough for my train set was still €5 million plus.

I'm also struggling a bit with the whole Princess boats struggling to sell as well. If they are and there's a fire sale going on then put me down for a half price S65. For someone struggling they are still churning out a load of new models.

I don't claim to know how to read financial results, but I do know from my own tiny empire that numbers can be misleading. If I was gearing up to sell I could put some big numbers out there for a while, if I was looking to avoid a punitive tax regime we could lose a fortune!

The fact is Fairline have a very dated model line up and the all new 53 is a bit of a train wreck when you step inside. There are odd boats in the range which are buy-able particularly if the economic state of the company means you get a bargain, but like for like I can think of anything in the line up which strikes me as a class leader.


Henry :)
 
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Very interesting drift into capital markets, but as Henry highlighted I don't see the relevance to thread, either of the 2 leading British boat builders would be delighted to sell 150 boats a year! The real question is there a market demand in that segment, at the moment I'm not sure, the early 2000's was a boom time, with huge numbers of new boats sold, these are now flooding the s/h market and differential in price to current new is incredible, so sensible buyers are looking to the used market. Until all that excess s/h stock is cleared through, then boat builders are going to struggle... however as current boat owners find they have 'lost their shirts' over the last 7 years, they are unlikely to throw another huge chunk of capital at a new boat.

So the new boat market is largely made up of 'newbies', with the manufacturers looking at new aspirationals like the influx of Russians, Chinese etc, unfortunately they don't have much experience of personal boating (excluding Abramovich) or history, and really don't get what we all enjoy about our boating.

Frankly unless you 'love' your boat... forget it, otherwise it's nothing but hassle & cost, and I haven't met many Russians who want to 'love' a boat! Of course all imho... there will others who disagree :disgust:
 
henryf said:
But not everyone earns their money buying German bunds, presumably their version of an English bond?
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All fair points and apologies if I stated my case somewhat too strongly. My reference to international capital markets was really because these are the markets in which UK boat builders must sell and the markets from which investors, when necessary, are most likely to appear. It was walking down these corridors that I came across a couple of these businesses.

The first thing that struck me was the sheer quality of the product. The new R-R factory in Chichester say that theirs is the only BMW installation in the world that combines ultra-high level hand craftsmanship in the context of a high-tech assembly line. Apparently several of the leatherworkers came from a UK boat builder that went bust a few years back; BMW are delighted with them and with good reason as far as I can see.

Changing tack, investing like boats is a personal affair, and for me a deeper look into the finances of these businesses is not so comforting. The margins are just not there and without strong moats around their businesses it would be easy for a disruptor to march into their castle and squash them flat. As far as I can see no UK boat builder enjoys the protection of a pathfinder like R-R’s Spirit of Ecstasy, or Hermes’ “H”. Further symptoms of trouble include weak cashflow evolution plagued by a series of “one off” events. Adding debt into this mix to spice up earnings risks creating a very wobbly platform indeed.

Turning to their customers; for some these boats they are an expression of taste, for others tickets to a higher social class. Within the first category a boat almost never make any difference to the purchaser’s financial health. They are whimsical fancies and should they turn out to be good investments great, if not who cares. Sub-£5m boats very much fit into this category. If one wants a store of value buy a stock, a painting, an antique vase, not a yacht! The second category is never so secure, and a flood of sales of nearly new boats is a risk which must now be factored in.

The trouble is developments in the Chinese asset markets over the summer have hurt the new wealthy, and this may soon have relevance to the UK. A friend tells me that he’s sending young UK estate agents to Chinese cities he had never even heard of before, places like Shijiazhuang and Zhengzhou! UK state agents know how to get a good bubble sizzling and the Asian punters did not disappoint, helped along by a few lines of the BoE’s magic monetary dust. UK house prices now stand at 8.8x the national median income and the BoE is “closely monitoring” the growing “not-a-bubble-no-definitely-not”. I guess we’ll have to let Old Lady Time figure out the ending.

And finally, the Chinese government is currently bearing down on conspicuous consumption, which is in turn denting China’s voracious appetite for British Luxury products and Chinese investors’ zeal to acquire luxury British Brands. I’ve got to say I don’t envy the investor who must now batten down the hatches and navigate an overleveraged boat builder thorough the impending stormy patch. As ever, hats off and much respect if they succeed!
 
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henryf said:
What about all those people who do boring stuff like run cleaning, medical research, IT, recruitment, travel and leisure, sales related, design and so the list goes on companies.
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Let me ask you a question Henry, you've presumably worked hard and have obviously been successful in your business endevours and consequently have purchased new boats. But even then, you still charter your boat out. Could you justify the expense without that charter income? Not trying to make this personal, just trying to make the point that boats have become so expensive that even those with good incomes can no longer afford or justify the cost (particularly the depreciation). I always remember, when I was a 12 year old paper boy, the people with the biggest houses (Times and Observer readers) were the meanest when it came to tips. They didn't get those big houses by spending all their money by giving it away (on tips or I assume perishable goods like boats)!

henryf said:
I'm also struggling a bit with the whole Princess boats struggling to sell as well. If they are and there's a fire sale going on then put me down for a half price S65.
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Half price might be pushing it but!.....

More generally, perhaps the boating lifestyle doesn't have the appeal that it once did. I wonder how many of us had parent who were boaters or even got the bug watching "Howard's Way"!
 
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dom said:
Turning to their customers; for some these boats they are an expression of taste, for others tickets to a higher social class. Within the first category a boat almost never make any difference to the purchaser’s financial health. They are whimsical fancies and should they turn out to be good investments great, if not who cares. Sub-£5m boats very much fit into this category. If one wants a store of value buy a stock, a painting, an antique vase, not a yacht! The second category is never so secure, and a flood of sales of nearly new boats is a risk which must now be factored in.
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I'm very curious, what are you basing these 'facts' on?

I don't know anyone that owns a boat for any reason other than they really want a boat. As an 'expression of taste' or a 'status symbol' they're a complete non starter because they're tucked away in a marina, not parked outside someone's home or office where others can be impressed by their success. Likewise, a new production boat is never ever an investment like art can be.
 
Trying to over analyse boat purchases doesn't work. Why on earth would someone want to buy a superyacht - or 3, but they do. It's a bloke thing and it is mainly blokes.

Is the Chinese Market pivotal to the success of Princess? No. If there's some Chinese action Princess want a piece of it but Asia is bigger than just China. The world is bigger than just China. There are enough wealthy people in Thailand to buy the entire production of Princess. Whether they want to or are into boating yet, is another matter. But Princess isn't a car manufacturer. The sell a tiny number of units a year relative to a car manufacturer so there are lots of markets.

I don't claim to understand big business but there are plenty of people selling a product or offering a service that don't have copyright on a flying ecstasy or a "H". Ultimately Princess do own their crown logo, but you buy the boat not the logo on the steering wheel. With a handbag the logo forms a bigger part of the buying process. A rolls Royce is a very well known status symbol. I think Sunseeker are probably the masters of brand promotion and awareness in the boating industry. Princess have been a little shy in self promotion.

New or used - that's been a decision with no right or wrong answer since the dawn of time. Financially you'd buy used with everything but people still buy new stuff. It all comes down to how much money you've got. With something like a washing machine or TV most people consider it cheap enough to buy new but others buy used. As the price rises the ratio of new to used changes.

Back on topic Fairline do not build a good enough boat to compete across their range. That is the problem. Conversely I think Princess do.

Henry :)
 
henryf said:
Fairline do not build a good enough boat to compete across their range. That is the problem. Conversely I think Princess do.
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Henry, I agree your post generally but the bit quoted above is interesting food for thought. I agree what you say there: progress in developing the model line up is 10x stronger at P than F. Thing is, none of that seems to turn into money and that's the worry for this industry. P still burn bucket loads of cash/lose buckets of money, year in year out, and brace yourself for when they announce 2014 numbers which have, yet again, missed the filing deadline. Kinda makes you wonder what is the point, unless you believe a big turnaround in this market is just around the corner, which I don't. Looking back, the late Graham Beck really did call it right (iirc, ballpark, £35m EV for FL in 2005 and £200m EV for Princess in 2008, numbers that are wildest dreams now for either set of shareholders)

There needs to be a big reset in this industry. What you have is a stack of boats sold some years ago in the boom times now flooding the used market, while the builders thought sales would continue and expanded with many fixed costs, and misjudging the shape of the demand curve and the market's willingness to accept higher new price. The gap between new price and nearly new price ("price to change") is enormous, so new sales are falling. Plus the Asia/China/Russia drop off, a bit of currency mix too, and the Ford model T makers Beneteau doing a better job for good measure. Thus you have Princess who have done everything right industrially with lots of new infusion models with big glass and Fendi throws and all that, losing shed loads of money

The only guy who seems to be doing it really right, modern day Graham Beck, is Paolo Vitelli
 
jfm said:
brace yourself for when they announce 2014 numbers
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This months MB&Y reports Princess 2014 loss at £11m on static sales of £240m, and Sunseeker a staggering £41m loss on sales of just under £200m (sales down £70m from 2012, no mention of 13). If these figures are correct, and I haven't checked at all, then that's a 20% net loss for Sunseeker!

It all looks pretty bleak in the boat building industry right now, lets hope some of them find a way to turn it round.
 
Nick_H said:
This months MB&Y reports Princess 2014 loss at £11m on static sales of £240m, and Sunseeker a staggering £41m loss on sales of just under £200m (sales down £70m from 2012, no mention of 13). If these figures are correct, and I haven't checked at all, then that's a 20% net loss for Sunseeker!

It all looks pretty bleak in the boat building industry right now, lets hope some of them find a way to turn it round.
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Sheesh, and people think Fairline have problems.
 
Nick_H said:
This months MB&Y reports Princess 2014 loss at £11m on static sales of £240m
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Thanks Nick. Haven't read mag yet. P's 2014 accounts are not yet filed at co house, or at least they are not showing as filed on my corporate-strength Co-House internet feed (which I think can have a couple of days time lag). The filing deadline was 30/9-15 of course, so they're late, ditto last year. I expect the accounts will show a million a month of cash burn, but lets see when they're filed.

I'm not knocking Princess's boats. Love 'em. Just commenting on the business/market, all imho
 
If I can add my 0.02 p worth ?
I think JfM kinda crystallised it in post # 49 , but if I may add in post banking crisis -past 7-8 years or so perhaps folks are more cautious with disposable income .More likely to spend it on land ,bricks and Mortor + traditional investments .
Cos not really sure if another £££ "hit " is over the horizon .
Rarther than tip more £££ in into a bigger new boat .
The old adage if it flies , floats, or F*** s -- rent it .
Last Y I upgraded to a 50 ft mooring in SoF .Went through the new / 2nd hand / one of our big 3 or Italien .
Ended up with an appartment in WC1 for my son starting Uni -also save on accommodation costs , it's in his name -mitigate from UK inheritance tax going forwards ., and a 2001 ITAMA the boat to fit the mooring .
Still boating cos some one said "you have to love it "
But no SS San Remo 48 or new Prinny or FL targa 48 - you could scale this up -same principle .
I have a mate started with a Pred 92 + shooting estate of 1000 hectares in Baldricks .
+1 SS sale .how ever wife did not like the lapping water noise sleeping at anchor -used as day boat -put up
For sale after one season -Not p-exed on a bigger boat .
A 12month experiance .lost £2M
Following year villa was gassed and burgled while they were sleeping ( School hols wife + kids shaken up ) -that's now sold .
Another "boaty "mate " sold up his Benetti 125 -after 7 y ( wife never liked it ) -now taken up aircraft / flying -so agian
Our big 3 missing out .
Nobody need a boat -even V well wealthy folks nowadays .They Rent .
 
Portofino said:
JfM kinda crystallised it in post # 49
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Seconded. An excellent analysis, from someone with a deep knowledge of both the industry and the modern investment logics.

Otoh, I can't see any huge differences in what Princess is doing from an industrial and market perspective, compared to A-B group.
I mean, for any given boat size, it's not like Azimut boats are outrageously better or cheaper than Princess.
So, what is it that "The only guy who seems to be doing it really right" is actually doing so much better than Princess & C.?
 
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MapisM said:
Seconded. An excellent analysis, from someone with a deep knowledge of both the industry and the modern investment logics.

Otoh, I can't see any huge differences in what Princess is doing from an industrial and market perspective, compared to A-B group.
I mean, for any given boat size, it's not like Azimut boats are outrageously better or cheaper than Princess.
So, what is it that "The only guy who seems to be doing it really right" is actually doing so much better than Princess & C.?
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In my opinion it was may be a bit of luck, and perfect timing.
He did the major investments where things where very rousy in the first decade of the first century.
1. Expanded the La Spezia big Benetti plant in 2005.
2. Bought Gobbi in 2001 (left the plant in 2012) might have been one of his wrong investments, but he needed the knowledge of production Gobbi had in the time.
3. Expanded Azimut Turin facily in 2006/7. Came in handy since he moved Atlantis in the new sheds where the market was slowing down.
4. Savona deliverey facility in 2000
5. Bought the large yard in Viareggio (adjacent to the old Frattelli Benetti) in order to expand the fiberglass production facility, plus having the largest service center in italy. (this is very much overlooked)
This purchase also included the sheds where Tecnomarine use to be built. Think it was 2002.
6. 2000 Bought the Moschini yard in the Adriatic (one of the most large and advanced fiberglass sheds in the Med at the time).
This was also done to slow a bit Ferretti's expansion into larger sizes (Custom Line used to be built there at the time).
7. 2007 opened Marina di Varazze.

Those are what I remember but I think the strategies where mostly all spot on.

Ferretti Group could have been more or less in the same spot if not for the investment bankers, and more expensive product to build, loads of different brands and type models.
You cannot share a hull of a Ferretti with a Pershing or an Itama for example, they are very different boats.

I think Princess started investing in super yacht in more or less 2010 when they bought that shed in Plymouth. Up until then the maximum capacity has been of what 90 feet?
Sunseeker has also recently expanded to go beyond 130 feet. So what Princess and Sunseeker might be is that they are just a bit late.
Ten years ago you could finance your growth with the selling of medium sized boats, nowadays you cannot do a lot of that.
 
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jfm said:
Henry, I agree your post generally but the bit quoted above is interesting food for thought. I agree what you say there: progress in developing the model line up is 10x stronger at P than F. Thing is, none of that seems to turn into money and that's the worry for this industry.
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I am not denying that Princess seem to be running away with themselves in terms of price. If I think what I paid for a P42 in 2007 and what they are asking for a P43 today the mind boggles. Yes the P43 is a better boat but it isn't a 50 footer plus.

I also don't know what the long game is for Princess. If they can't make money with such a strong model line up what hope is there? You might argue that they are tidying the line up ready to cash in but the development never stops. There are a lot of models in quite a small segment of the market. They make a staggering 25 different boats and to me that is the problem. We aren't talking variations here, we're talking individual models each with their associated development cost.

Apple don't make 15 different phones. Despite selling over 200 million units last year give you a choice of 2 phones and say take your pick.

Have courage, condense the range down, enjoy the associated scale of economy and saved development costs, make more money and possibly even allow customers something approaching value for money.....

Henry :)
 
Portofino said:
If I can add my 0.02 p worth ?
I think JfM kinda crystallised it in post # 49 , but if I may add in post banking crisis -past 7-8 years or so perhaps folks are more cautious with disposable income .More likely to spend it on land ,bricks and Mortor + traditional investments .
Cos not really sure if another £££ "hit " is over the horizon .
Rarther than tip more £££ in into a bigger new boat .
The old adage if it flies , floats, or F*** s -- rent it .
Last Y I upgraded to a 50 ft mooring in SoF .Went through the new / 2nd hand / one of our big 3 or Italien .
Ended up with an appartment in WC1 for my son starting Uni -also save on accommodation costs , it's in his name -mitigate from UK inheritance tax going forwards ., and a 2001 ITAMA the boat to fit the mooring .
Still boating cos some one said "you have to love it "
But no SS San Remo 48 or new Prinny or FL targa 48 - you could scale this up -same principle .
I have a mate started with a Pred 92 + shooting estate of 1000 hectares in Baldricks .
+1 SS sale .how ever wife did not like the lapping water noise sleeping at anchor -used as day boat -put up
For sale after one season -Not p-exed on a bigger boat .
A 12month experiance .lost £2M
Following year villa was gassed and burgled while they were sleeping ( School hols wife + kids shaken up ) -that's now sold .
Another "boaty "mate " sold up his Benetti 125 -after 7 y ( wife never liked it ) -now taken up aircraft / flying -so agian
Our big 3 missing out .
Nobody need a boat -even V well wealthy folks nowadays .They Rent .
Click to expand...

I don't know for sure, but I'm pretty certain you could pick any year out of the last thirty and find two people who could have bought a new boat, but didn't. Not convinced that's conclusive evidence to be honest...
 
henryf said:
Apple don't make 15 different phones. Despite selling over 200 million units last year give you a choice of 2 phones and say take your pick.
Click to expand...

iPhone 5s
iPhone 6
iPhone 6 Plus
iPhone 6S
iPhone 6S Plus
iPod Touch
iPod Nano
iPod Shuffle
iPad Pro
iPad Mini 2
iPad Mini 4
iPad Air
iPad Air 2
iMac
MacBook
MacBook Air
MacBook Pro
Mac Pro
Mac Mini
Apple Watch

I'm not convinced Apple are the greatest example of slimmed down product lines. :)

How about successful car manufacturers - Mercedes? Audi? Nope, massive ranges - way way bigger than they were a decade ago.

Even Porsche now has seven distinct models where they used to have two - and that's before you start splitting the (for example) 911 into Carrera, Carrera S, Carrera 4S, GTS, Cabriolet, Targa, GT3, GT3 RS etc etc etc.

Look at MINI, very successful - started with a single model, now have six distinct model ranges.
 
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