Grand Banks Yachts Reverses Loss To Profit
Published: Tuesday, 27 October 2015
Grand Banks Yachts Limited (The Group) has revealed that its net profit after tax for the quarter ending September 30 2015 (1Q FY2016) swung from a loss of S$1.3 million in 1Q FY2015 to S$1.2 million net profit.
(Grand Banks 55 Aleutian)
“The latest quarter reflects initiatives undertaken in the past 12 months which will assist us in enhancing shareholder value, moving forward,” says Grand Banks Chairman Heine Askaer-Jensen.
Following restructuring efforts after a major acquisition, gross profit margin increased to 24.5% from 9.5% over the comparative periods.
The Singapore Exchange-listed company explained that net profit rose after introducing initiatives to integrate design, production and marketing following the acquisition of Palm Beach Motor Yacht Co Pty Ltd (PBMY) of Australia completed in August 2014.
1Q FY2016 revenue more than doubled to S$14.0 million from S$6.5 million a year earlier, due to progressive recognition of orders, including revenue contribution from the first two Palm Beach yachts being built in Malaysia.
Gross profit increased to S$3.4 million from S$0.6 million over the comparative periods. Together with improved internal efficiencies in two manufacturing locations, this helped lift gross margin to 24.5%. Total operating expenses stood at S$2.1 million in 1Q FY2016, similar to 1Q FY2015.
(Grand Banks at Newport Int'l Boat Show – Sept 15-18)
Since acquiring PBMY, Grand Banks has aligned production between facilities in Malaysia and Australia. Moving production of certain Palm Beach models to Malaysia has helped to reduce costs, as well as streamlining operations, increased training and the introduction of new boat-building equipment.
The Group has adopted a factory-direct sales model in North America, which has not only delivered a better customer experience but also significantly lowered distribution costs. The Group's gross profit also benefited from the strengthening of the U.S. dollar – the currency in which at least half of the Group's boat sales are denominated – against the Australian dollar and Malaysian ringgit.
Earnings per share reversed from a loss of 0.70 cents in 1Q FY2015 to 0.66 cents for 1Q FY2016.
Cash flows used in investing activities were S$1.4 million for 1Q FY2016, due to the development of new Grand Banks and Palm Beach yacht models, which have generated six new orders as of the end of September. In comparison, cash flows used in investing activities in 1Q FY2015 were S$9.2 million mainly due to the acquisition of PBMY.
After adding five new orders from recent boat shows, Grand Banks has shown profits accumulated in the net order book. As of September 2015 the net order stood at S$32.1 million compared to S$17.5 million a year ago.
In the quarter under review, Grand Banks participated in the Newport and Norwalk boat shows in the U.S., and will take part in the Fort Lauderdale International Boat Show 2015 (Nov 5-9).
(Grand Banks 55 Aleutian RP)
“Having completed the bulk of our integration initiatives, we have built a new foundation to strengthen design, production, communication, and internal efficiencies,” says Grand Banks Chief Executive Mark Richards.
Barring any unforeseen circumstances, the Board of Directors expects the Group’s FY2016 performance to improve significantly compared to FY2015.