YARD UPDATE '08: Groupe Beneteau...

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YARD UPDATE '08: Groupe Beneteau...

Yard Updates

Financial year ‘06/07 was its 14th consecutive year of growth; and it's ‘on track’ for its 15th…

JANUARY 2008

Publicly quoted on Euronext Paris Compartiment A, Groupe Bénéteau, Europe’s largest pleasureboat building operation and the world’s largest sailboat builder, is apparently still firmly on the growth trail. Its turnover ended up at around €1.014 billion for its year to the end of August ‘07, up 9.5 per cent on the previous year’s €926 million and through the billion euro threshold at last.
It wasn’t all marine industry growth in there, however. Last year saw the group acquire another non-marine business (IRM mobile homes), which boosted the numbers beyond organic expectation. Originally its five-year ’03-08 business plan required that billion-euro milestone to be reached in the current ‘07/08 financial year, so the group is now comfortably ahead of target.
Of the ‘06/07 group total, 78.8 per cent or €798 million was from its new-build boatbuilding activities under its
Bénéteau, Jeanneau, Lagoon, CNB and Wauquiez brands. So its boatbuilding activities actually grew organically by some 9.7 per cent, which is still not bad at all for an operation performing on this scale and in a less than easy global marketplace. Overall its power segment grew a few points more than its sailing segment interests, which grew a few points less.
Across the brands, most of which combine power and sail interests, the breakdown was roughly thus:
Bénéteau 46 per cent, Jeanneau 41 per cent, and CNB/Lagoon/Wauquiez 13 per cent. All divisions grew during ‘06/07, save for Wauquiez, which saw a major contraction of its sales from €16.2 of the previous year to €8.9 million.

'As of December ‘07 the total group establishment numbered around 6,000 full-time employees, plus 500 or so temporary workers...' 

As regards volumes, Groupe Bénéteau probably does something like 12,000 boats a year, but seeing as it won’t actually divulge all its unit sales we can but speculate. Our best guess would be that very roughly ‘06/07 saw something like 5,000 Bénéteau-branded models (2,700 sail, 2,300 power) delivered, plus 5,200 Jeanneaus (1,800 sail, 3,400 power), around 50 Wauquiezs, 260 Lagoons (230 sail, 25 power), and one or two CNB custom sailing yachts, as well as a thousand or so small ‘Rigiflex’ boats.
Those ‘06/07 results registered the group’s 14th consecutive year of growth. Indeed, what we know today as Groupe Beneteau has certainly come along way since the mid-1990s. Back in ’95 — in the days before original entity Chantiers Bénéteau acquired its principal competitor Jeanneau — its turnover was the French franc equivalent of just €106 million.
Today there are around 24 Groupe Bénéteau production sites, most of which are in France. Abroad it has its sailboat building satellite in Marion, South Carolina, which it opened in ’86, and its Ostroda motorboat plant in Poland, which was acquired in ’02. As of December ‘07 the total group establishment numbered around 6,000 full-time employees, plus 500 or so temporary workers.
Most importantly for the business and its shareholders Groupe Beneteau’s profitability has also been climbing nicely. Its operational profit for ‘06/07 reached 13.3 per cent or €135 million, up from 12.6 per cent of ‘05/06 and the 12.1 per cent of ‘04/05. Its net profit figure for ‘06/07 was 9.2 per cent or €93.6 million.
Certainly the group has been constantly reinvesting and expanding capacity. Beyond all the plant expansions that have been necessary to fund its impressive growth record, we’re talking about 20-plus new models across the group each year. Yet there are no borrowings whatsoever.
With a presence in no fewer than 50 national markets, Groupe
Bénéteau’s export business accounted for 76 per cent of its ‘06/07 sales, but note the marine export tally is quite a bit higher than that as the numbers are skewed a bit by the group’s non-marine businesses, meaning ‘microcars’ and portable homes, which have a lot less export potential… Recently Groupe Bénéteau announced its intention to sell its microcar business to concentyrate on its two core sectors – namely boats and portable homes.
“The euro trend is still very positive as far as we are concerned for new-boat sales,” says longstanding boss at Groupe
Bénéteau, president Bruno Cathelinais. “In France the lack of berths is increasingly a real problem, but we still managed to grow our business there last year… In Italy the imminent general election should help improve the situation… UK is still good… Spain was very good this year… But the US market has been affected on two levels. Apart from an obvious slowdown in the US economy, which has impacted what we deliver from our plant there, the weak-dollar, strong-euro exchange differential has obviously hit our export competitiveness hard… The dollar position has to be tackled… Personally I think we’re looking at a medium-term problem rather than a short-term one, so we will have to react… We have to take a decision very soon as to what we do… We’re considering building more models in the US and delivering more of the boats that need go to the Pacific Rim countries from there… We could invest in a new wood shop over there that could feed the rest of the group… Or we could start building Jeanneaus there… There are a lot of options.”

'We are now so far ahead of where we were last year that 2008 has to be a better year again…'

At the moment Bénéteau’s Marion plant only builds sailboats at that facility and the interiors for them are shipped out from France. Both Bénéteau and Jeanneau export sailboats across the Atlantic. But neither attempt to sell motorboats into North America, save for a few of the niche-market Bénéteau Swift Trawlers.
“For ‘07/08 we’re looking for another eight per cent growth overall,” says Cathelinais. “And in recent years our forecasts have always been conservative… In fact we are now so far ahead of where we were last year that 2008 has to be a better year again… We saw no real dent to our projections during the autumn shows… We expect growth in both sail and power sector, but the power side is still growing faster. But predicting is never easy. The motorboat segment is more sensitive to economic shifts. The sail sector is much less sensitive… We expect to continue to grow through 2008, 2009 and 2010.”
Beyond that the group has also recently declared its interest in acquiring a power player that will provide marketshare in the 15m (50ft) and above sector, where of course it is currently not represented. With its €200-plus millions of liquid reserves, Bruno Cathelinais, said his company could conceivably go to around the €500 million mark for the right proposition without having to raise more money via the stockmarket. However, he said, the “price would have to be right”.
“Up until recently private-equity fund interest in this sector has meant some crazy valuations,” he said. “Because of that prices have been way too high for those of us in the industry… We were never going to pay silly prices…”
But with all the upheavals in the financial markets around the world since then he may well have changed his view on that score.
So don’t be surprised if Groupe Bénéteau picks up a few bargains in the months and years ahead should things end up slowing.

For more, www.beneteau-group.com.

© Phil Draper