[dropcap]A[/dropcap]fter one of the most challenging years in its history, Princess Yachts International Plc (PYI) today reports a loss before taxation of £20.25m on turnover of £201.23m for the year ending 31 December 2015 (2014: £239.63m). In January this year Princess had announced the forced job losses for 172 workers (however, fewer than half the figure that was originally envisaged), as part of a company-wide restructuring.
As states The Plymouth Herald, the yacht industry has faced a set of “unprecedented challenges” which led to it suffering millionaire losses in 2014. Factors hitting the export-heavy industry include unfavourable euro/sterling exchange rates, recession in target markets, political upheaval in the Middle East and Russia, a slowdown in the Chinese economy, and even the 2014 storms which battered the South West. However, Princess Yachts stressed its core business was sound, with a strong order book. The same announcement that Princess confirms even today, in front of its considerable operating loss.
The shipyard, which in 2008 was acquired by L Capital 2 FCPR, the largest global consumer-faced investment firm, co-sponsored by LVMH (Moët Hennessy Louis Vuitton) and Groupe Arnault, has explained that, although disappointing, exceptional factors have played a significant part. The lingering effects of damage to stock, facilities and production scheduling caused by the hurricane-force storms in 2014, coupled with unfavourable sterling exchange rates and high-margin boat models reaching the end of their life-cycle combined to exert unprecedented pressure on PYI’s operations throughout 2015. In the meantime, PYI has strengthened its product line – adding six models to its range in as many months – and appointed an Executive Chairman, Antony Sheriff. Previously CEO of McLaren Automotive, and holder of a number of senior roles at Fiat, Mr Sheriff has a strong track record in leading profitable businesses with best-in-class luxury products.
Already, PYI is seeing tangible indications of a return to normative performance in 2016 with positive operating profits over the past three months. Orders are at their highest levels since 2007, with record sales at the Cannes Yacht Show in September, and trading conditions are increasingly favourable, as the company is deriving significant market advantage from the recent realignment of sterling-based exchange rates.Significantly, Princess has embarked on an ambitious product development strategy and a new product renewal cycle as part of its long-term business plan and the company is now recruiting skilled professionals in key areas to realise its ambitions.The board forecasts renewed buoyancy across the PYI business in 2016 and 2017. Already, £14m has been injected as the first stage of an ambitious three year £55m investment by PYI which will see further development of the product portfolio, as well as production improvements at the company’s manufacturing facilities in Plymouth, which employ more than 2,000 people.