Good time to be a British boat builder

[Nick_H]

There is a report on YBW about Sunseeker being one of the 100 most succesful private equity backed UK businesses in terms of profit growth over the last two years. It also mentions that 99% of its product is exported.

Now add to this that in the last 24 hrs, the euro has strengthened 2% against sterling, to a total of almost 15% since late last year. As Sunseeker already have healthy forward order books, there is no great need for them to reduce their euro prices, as in most cases the competition is built in Europe so will not see the benefit, which seems to suggest that the difference will instead go to their bottom line.

To put that into perspective, a Manhattan 60 sold last year to an Italian buyer for 1.1m euro, would equate to £745,000 sterling for Sunseeker. Sold today at the same price it would equate to £866,000, which will probably double or triple their margin on each boat sold in euroland.

If only you could buy shares in them ....

 

[nigelcarton]

Not so good for the ditch crawlers at the mo, bit of a slump going on this side of the fence.

 

[Hurricane]

Try buying something in Europe though - a berth for example - it hurts.

 

[halcyon]

The cheap French diesel is also going up, as is the booze.

Brian

 

[powerskipper]

sunseeker sells an image/name and there boats are good too /forums/images/graemlins/grin.gif

 

[MapisM]

[ QUOTE ]
that 99% of its product is exported.

[/ QUOTE ]Do the C.I. count as export? /forums/images/graemlins/wink.gif

 

[powerskipper]

yes

 

[MapisM]

Well, not a very meaningful figure in this case, is it?
They could as well claim that 100% of their products float...

 

[Nick_H]

Why? They only go to the CI's on their way to another export destination, and I don't think many go that route now anyway.

 

[MapisM]

Well, anyhow it's simply unrealistic that just 1 out of 100 of their boats is sold to UK buyers, isn't it?
The various arrangements created to purchase boats, and their destination harbours, are another story.
But any builder of big stuff knows perfectly what percentage of its sales is really (as opposed to formally) domestic or export, because the builders know the persons they're dealing with.
I understand that a builder don't want to (or even can't) disclose the real figures, but it can't pretend that the formal ones are meaningful.
On the other hand, would you say that the 99% export claim we're talking about is comparable to the same percentage (or even higher) of any taiwanese builder?

 

[jimg]

It is probably measured by value not number of boats?

 

[MapisM]

Possibly, but the song remains the same.

 

[PowerYachtBlog]

I agree with Mapis
Sunseeker sells about 65-75% of its new fleet to British indivuals in the end
the 1% figure is only about British flaged ones, with a production of about 300 - 400 boats a year that would make it 4 boats a year sold to British clients, IMO it is impossible
for example: the 90% of new Sunseekers that arive in Malta are always owned by British people and I enchounter the same experience in foreign marinas in the med..

 

[stelican]

I would expect that Sunseeker exports are priced and paid in sterling therefore it is the EEC dealer or the end user converting euros to sterling who reaps the benefit of the strong euro. I think!

 

[Deleted User YDKXO]

Yup, just what I was thinking and it's great for British export manufacturers. Unfortunately, since most of what we consume is imported, it's maybe not so great for UK inflation in particular and the economy in general. As an importer, I'm spending a lot of my time at the moment explaining to recalcicrant UK customers why the same product they bought last year is suddenly 15% more this year

 

[Andrew_Fanner]

My son has an option for a marine engineering apprenticeship as on of his O level type options. He is keen and we are supporting him in this. I awat developments. Apparently entry is competitive so I hope being a boater will weigh in his favour, and that this Sunseeker news ups demand for people to enter the system.

 

[Nick_H]

Export is determined by location, not nationality of the buyer, so if a boat is delivered to France, its export, regardless of who bought it. I agree that many of those export buyers are Brits, but I also think this proportion is reducing, as more Russian, Eastern European etc. buyers enter the fray alongside existing Western European buyers.

Anyway, that wasn't really my point. My point was when new buyers, regardless of where they're from, compare Sunseeker (or Fairline or Princess), with Azimut, Ferretti, Astondoa, Rodriguez etc etc, if they buy in euro they will see the same pricing as last year, but the UK builder will get 15% more revenue from that sale. With only a small percentage of their costs in Euro, and a healthy order book without further euro discounting, the builders will realise most of this increase to profit.

 

[jfm]

I agree that the 99% exportedis only physical destination so it is not really exported in balance-of-payment terms, becuase many of the buyers are UK. The last 37 launched and the 34m have been bought by UK buyers, so they are not exports in the sense of the UK's economy.

That said, all sunseekers sold avoid imports. I mean, if sunseeker weren't around lots of British buyers would buy Ferrettis or whatever, which would be imports (economically, not physically), so full credit to Sunseeker for keeping internationally mobile big-ticket spend in the UK.

Anyway you are right houghn. Uk builders should be feeling pretty good that their product is subddenly 15% cheaper than Ferretti et al. That should allow price rises straight to the bottom line. That daid, the forward order book is 12months+ often, and they are all fixed price orders, so list price rises made now will take a while to arrive at the bottom line

 

[Deleted User YDKXO]

Not sure it's all good news as Sunseeker will be buying Euro denominated components (eg engines) and some Euro denominated overheads (eg European exhibitions, advertising and other marketing costs) plus having to bear ever increasing costs of oil based materials but, overall, I'm sure they or their European dealers (which is a moot point) are quids in at the mo
Btw, Ferrettis were already 15-20% more pricey than SS so that will be 30-35% now. The Ferretti 510 at LIBS was about £1m then so that will be £1.15m now compared to a Manhattan 52 at about £750k (?). Yup, can't see many Brits with squids buying Ferrettis presently

 

[MapisM]

[ QUOTE ]
I agree that the 99% exportedis only physical destination so it is not really exported in balance-of-payment terms, becuase many of the buyers are UK.

[/ QUOTE ]Seconded.
Btw, as it happens, that's exactly the opposite of what houghn said re. "Export is determined by location, not nationality of the buyer"....
On the other hand, also the rest of your analysis is correct, so if the whole point was that UK players (not just in boating industry) with competitors in Euro zone can benefit from a GBP devaluation, well, that's obviously true overall.