Sunseeker has found a way to return to winning ways. With a good order book increase and healthy return to profit, the company appears to have recovered from a particularly bleak period for the luxury yacht building industry. In recent years the market has been extremely bad for Sunseeker and other British boat builders such as Princess and Fairline which had been restructuring and applying redundancies. The main reason that these businesses seem to have recovered, is due to the pound plummeting after Brexit making prices much more competitive when compared to their foreign rivals in export markets. However, the future is not entirely rosy, as Brexit may give with one hand and take with the other as tariffs, export costs and delays may see the demise of one or more of these companies in the future.
As a business which focuses primarily on very affluent customers, the market tends to focus of the same ownership group year after year. As the numbers of this particularly wealthy international group with an interest in owning and operating boats tends to stay generally the same overall year after year, the focus group for these types of products is very specific.
The strongest part of the market is at the very top where there are good profit margins and repeat business available on the huge ocean-going yachts of the very wealthy. Making sure these types of sales are as easy as possible is crucial to keep revenue ticking over and securing the big contracts for the vessels that will provide years of work for a company. As a result, Sunseeker offers part exchange, finance and endless bespoke options on its biggest yachts.
The trend in the market has been for yacht companies to focus increasingly on the top end of the market, producing more and more models aimed at the super rich. This has encouraged more companies than ever before to produce 100 foot plus vessels and Sunseeker is no different. The company traditionally focused on smaller vessels that were sports boat orientated but has followed the money and profit margins in the market. The profit margins at the top end of the market are very large and the business is fairly reliable.
Following the collapse of the pound since the announcement of Brexit and the subsequent snap general election in 2017, exports from the UK have been improving. Primarily UK yacht builders sell their products for operation in foreign markets, such as the Mediterranean, Middle East or Asia and so any currency advantage like this is extremely beneficial for this market. Bosses of British yacht companies said sales had increased as much as 50% in the second-half of 2016 compared with the previous year because of the Brexit factor discount for foreign buyers.
Tariffs, border movement problems, immigration restrictions and export delays are all possible things which could really hurt these businesses in the future. Only the Brexit scenario in which trade conditions were kept largely the same would be good for the UK boat building business and all other scenarios are likely to really hurt British exports in the immediate future.
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