YARD UPDATE '07: Princess Yachts International...

< < Go back

Yard Updates

Over £200 million turnover; 380 boats a year; and the highly successful new 95 flagship.

SEPTEMBER 2007

With a portfolio that now includes no fewer than 16 models from 11.6—29m (42—95ft) — nine flybridge models and seven open/hardtop express cruisers — Princess Yachts International continues to break all trading records. When its books close for calendar ’07 its sales should end up at between £200-205 million, which will equate to a value growth of at least 25 per cent over the previous year’s £160 million or so, which incidentally was also up by an impressive 20-plus per cent or so.
Unit volumes rose less markedly. In all the company delivered some 380 boats during ’07, up from 360-365 or so the year before and 320-325 the year before that one.

'Managing Director, David King: "Based on the order book alone I expect to see at least another 10 per cent on turnover for calendar ’08..."'

Moreover, the forecasts for the year look pretty good too. “I tend to be naturally cautious when it comes to forecasting and I’m never keen on sticking my neck, tempting fate,” says the company’s longstanding managing director David King, “but I have to admit things do still look very good… Don’t ask me why but sales seem to be stronger than ever and just about all the recent shows, save for the American ones, have been big successes for us… Certainly our order book is up 15-20 per cent on what it was a year ago… What’s more, the growth we’re seeing is both ways, meaning were not only selling higher value boats, but also more boats… Based on the order book alone I expect to see at least another 10 per cent on turnover for calendar ’08 and that will be capacity restricted… We’ve got another big new hall under construction but the effect of that won’t be felt until the second half of the year… Through ’08 I expect to see five per cent growth in the first six months and probably 15 per cent in the second half of the year, which is where the 10 average figure comes from…”
Much of the increase in unit numbers now and on the order book are down to additions to the portfolio; particularly the high-volume V45, which is available with optional Volvo Penta’s IPS drives. It joined the line-up a year ago, so ’07 was its first full year in production… The other addition is the new range-topping Princess 95, although that one’s impact is more on values than units. The first one hit the water during May and three of those should have completed by the end of ’07 — the first went into the water in May, the second in September and the third should deliver for December.
Indeed the success of that flagship model, which actually measures 29m (95ft 7in) overall, although her official load-line length is just 23.99m (78ft 8in) and so just under the important 24m (78ft 9in) certification barrier, is already assured. Orders for that one already stretch through until mid-2010 and currently they number in the ‘low teens’. The first one went to Turkey, the second to the Black Sea and the third to the western end of the Mediterranean.
A five-year-old facility plays a big part in the company’s development of bigger models and interestingly it could conceivably cope with hulls up to almost 37m (120ft) in length, which means future flagship could have an LOAs conceivably as big as 40m (130ft); so yes we could well see Princesses eventually going quite a bit bigger still.

 

'Despite growing its sales by around 25 per cent — probably 20 per cent in real terms, once allowances are made for inflation — its head count only increased over the past year by around 12.5 per cent... “That’s productivity!” says King.' 


Overall, occupying some 55 acres of land area on four sites in and around Plymouth that include 15 or so factories and site area that add up to around 100,000 square-metres (1,000,000 square-feet), Princess employs 1,800. So based on its ’07 turnover projection the sales-per-worker ratio is just under £114,000. But the ratio is improving all the time thanks to the company’s investment over the past few years in lean-manufacturing programmes. Despite growing its sales by around 25 per cent — probably 20 per cent in real terms, once allowances are made for inflation — its head count only increased over the past year by around 12.5 per cent.
“That’s productivity!” says David King. “For sure we have already achieved a great deal with our lean culture,” says King. “But we’ve still got a long way to go… We’re probably three to six months behind where we want to be. At the moment we’re something like 70-75 per cent lean and another year should see us well advanced… The benefits of lean thinking directly impact the bottom line, but also mean we are so much more space efficient… It literally allows us to build more boats a year… It is about working leaner, smarter… Our net profit is currently around 10 per cent; and to put that percentage into perspective, the figure was around seven percent three years ago. Believe me when I say to put a percentage point on the bottom line every year for the past three years is serious stuff, especially while growing the company at the sort rates we’ve been achieving at the same time!”
Naturally most of Princess’s business comes from export markets, but the raw percentage figures are a little misleading. Generally around 15 per cent of sales are in sterling, but two-thirds of that come from boats that will be kept outside the UK.
“Geographically just about everywhere, save for the US, is doing well,” says King. “And in the US, although things are down quite a bit, business doesn’t really look too bad there, particularly for bigger models. Considering the economic situation there and the weakness of the dollar we’re not doing too bad… In fact when you take all of that into consideration our partner out there Viking Yachts is obviously doing a great job! In the USA Princesses are branded Viking and most of them tend to be 15m (50ft) or bigger models.
In Europe even the well-developed traditional stronghold markets of the UK, France, Spain and Italy continue to show moderate to strong growth — say, 15-20 per cent. And across the rest of the world we’re looking at 20-25 per cent growth in most places and a lot more in some of the ‘hot’ emerging markets…“
Plenty is going on as regards product development. For example, a V85 join the range imminently. Essentially Princess’s biggest hardtop model to date, despite the fact that she will sport a small flybridge, this one should hopefully be ready for a model debut at the London Excel show in January ’08. Up to now the largest Princess hardtop powercruiser model has been the V70, which joined the line-up just over three year’s ago.
Then for the middle of next year expect to see the Princess 85 Fly introduced and at some stage the all-new Princess 50 Fly will replace the existing model of the same name.
Princess remains part of the Renwick Group, which up until three years ago also owned major competitor Fairline. Renwick’s principal shareholder is South African billionaire Graham Beck.

For more, www.princess-yachts.com.

© Phil Draper