News article regarding Fairline.

RobWales

RobWales

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Just received this via email from the Boating Business News magazine link.

Fairline denies Mail on Sunday story
22 Jun 2009

FAIRLINE: Following another Sunday newspaper story suggesting Fairline Boats was not enjoying the best of trading, the company has issued another firm denial.

Derek Carter: ‘exceeded sales and profit budget’ In a statement released Monday morning – 22 June – the company said: A story was run in The Mail on Sunday on 21st June regarding Fairline and its relationship with RBS and 3i. Disappointingly the article is based around information previously circulated rather than any new content.

Firstly, with regard to the ‘sale’ in November 2008 referred to by the article, this was covered by another Sunday paper in March 2009 and Derek Carter answered media questions at the time confirming: “Fairline and 3i did not actively put the Company up for sale; they were approached by a single buyer last year and took action in response to that approach.”

Today in response to media requests for an official comment in response to the Mail On Sunday article, Derek Carter stated: ‘It is regrettable that some news media choose to run articles based on old information. With regard to the future business outlook I am delighted to confirm that both Royal Bank of Scotland and 3i remain very supportive of the business and its development plans for the next three years.

‘I can also confirm that after the first five months of trading the business has exceeded its sales and profit budget for the year to date and our dealers have retail sold 122 boats, which is an excellent result considering the environment in which we operate.’
 
...I wonder how many of the 122 boats retailed were stock boats and sold at a substantial discount. What is important is how many Boats are on order and being built....though I do not expect to get that Info.

I am sure the new Sq 55 and 65 will sell well, even in this climate.

Paul /forums/images/graemlins/smile.gif
 
[ QUOTE ]
...I wonder how many of the 122 boats retailed were stock boats and sold at a substantial discount. What is important is how many Boats are on order and being built....though I do not expect to get that Info.

I am sure the new Sq 55 and 65 will sell well, even in this climate.

Paul /forums/images/graemlins/smile.gif

[/ QUOTE ]

I dont have access to their data but like any sensible company in this market they track their own sales to dealers and they also track actual sales by dealers to end cusomers (which are counted when the end-customer signs order and pays deposit). I expect that when DC refers to 122 retial sales he means these sales to end customers. I dont agree with you that that the 122 isn't a significant piece of data. It is a direct measure of current demand run rate at the end customer level - critical information. In contrast, a big unfulfilled order book but no new customer run rate is dire straits. BTW, I expect not all of these 122 are delivered

I'm confident these are not a pile of old stock boats, becuase there are hadly any stock boats left. On entry into 2009 there were some stock boats but the above-norm element in that number was tiny compared to 122. Even the end of line model Sq58 had only about 6 stock boats at that point, and now there are (I think, might be out of date) 3 left worldwide. If you don't believe me try buying a stock Fairline now at a deep discount like say 25% off list, and see where you get to. The time to buy stock boats was, as I said on here before, last Autumn.

I believe what DC says on this. The quality of information and business journalism at Daily Mail is terrible, please dont anyone ever think that what they write is right. Sure, Fairline could do without this economy but it will prove to have been a good investment by its management team and 3i. Fairline took the medicine needed for this recession earlier than any of the other UK Big4, and on that point in particular FL's management and 3i got it right.
 
Many businesses will have exceeded their sales and profit budget for this year but it's a meaningless statement because there's no comparison given with previous years. Doubtless the budgets will have been severely slashed compared with previous years so it's not exactly an indicator of booming sales. As for the 122 boats sold, again it's a meaningless number unless it's compared on a like for like basis with previous years and, indeed, against competitors' sales. In any case, the UK boat building industry should be doing better than most other countries because of the weakness of the Sterling. The real crunch will come in the next year or two as Sterling is expected to rise and export markets will still be weak
 
Thanks JFM,

Not having a go at Fairline, just know that you can manipulate figures to mean anything and as Mike says most companies had rock bottom budgets for this year. 122 boats retailed is still not small but I am sure some of those were previously on order and some stock boats so I am interested in finding out how many new orders have been made (with at least deposits paid) in 2009 YTD.

I want fairline to survive and keep up their quality...but it must be worrying for all involved. I wonder if 3i have written down their investment.

Cheers

Paul /forums/images/graemlins/smile.gif
 
Ref your "I am interested in finding out how many new orders have been made (with at least deposits paid) in 2009 YTD", the answer is 122 to 31/5/09, from DC's statement. That's not boats "previously on order", that's people actually committing, signing, paying deposit in 1.1.09 to 31.5.09. So it's a true measure of the run rate.

Your concern that these are stock boats is misplaced. At the smaller end of the FL range there is much stockboat selling. A collegue here at the office who sails in Menorca just bought a new ph48 that was a stock boat, but it wasn't heavily discounted and was almost the only stock boat in the system. It's in the 122. All perfectly fine. You'd expect much stock boat selling at that size. A bad sign would be if the total number of unsold stockboats is unusually high, but it isn't, becuase they have turned production down since last year (that's what I mean by early medicine) and the 122/5months sales is a run rate that means stocks are not piling up fast.

I don't know if 3i have written their equity down but I'd be very surprised if they have. I'd expect it is worth more than they paid, even now in this economy. But I haven't checked and don't know for sure.

you can sense in DC's statement that he's annoyed at the lousy quality of the UK business press, esp at the Daily Mail end. And he's right. There is an unbelievable amount of complete rubbish written in most of the UK press on business matters generally. Just don't assume that becuase it's in print then it's right. I'd suggest you don't believe the F1 stuff over the weekend, incl on "respectable" websites like BBC, either!
 
Cashflow is the real measure of survival. many a firm has gone bust with a large order book, but if the cash is not comming in, then the order book means nothing.My take on DC's statement is that orders and cash are meeting budget. I'm sure budgets are much tighter than last year, but if F/L meet their budgets, investors will be happy.
 
I think Fline and three other UK brands will suffer more a hard 2010 then it was 09 because of the UK£ gaining ground on the EURO
this did help much more then one thinks the UK boating industry
Fairline sold 6 boats to Maltese buyers this year versus a 2 or 1 per year in the previous 4 or 5 years
all these sold have been taken mostly from the Italian Azimut Atlantis which last sold a similar number and this year managed 5 sales
this is just to show a picture of what the weak pound did to help Fairline, Princess sold 3 this year versus 1 boat last year
yes 120 plus was good for Fline as in October they prepared production for 100 BPY
 
my little bird told me 200 was in August / September
but then when that US bank went down many started to reconsider and Fline was one of them
I am 99% of the thinking if they where ramped up to produce for 200 boats and sold delivered 120 Fairline would be closed at the moment
and I think in 2008 they delivered about 180 or 190 so why to produce more if things looked uglier in September 08 versus 07
 
When I visted the factory a couple of months ago they were busy and had 27 orders for the SQ55 yet to be delivered, let alone the new SQ65.

The larger boats must have a better margin and this must be the reason that all the yards are moving up in size.

I met with Derek Carter in their new purpose built offices and I didn't see a man that was stressed or worried.

-Andrew
 
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