Princess Yachts has reported record annual revenue for 2017, bolstered by the booming global economy and foreign buyers attracted by the fall in the pound since the Brexit vote.
The Devon-based company expects 2018 to be even better after taking on 500 workers at its Plymouth shipyard to meet “exploding demand” from global customers who pay up to £18m for a luxury boat.
Revenue for the year to the end of December jumped 27% to a record £274.4m as orders streamed in from the US, Asia and Europe as well as the UK. As a result, Princess swung to an operating profit before exceptional costs of £7.9m from a loss of £7m the year before.
The company’s order book stands at £750m and its workforce has jumped to 2,700 from about 2,200 at the start of 2017. Princess delivered 230 boats in 2017 but it has been selling them at a rate of about 300 a year.
Antony Sheriff, its executive chairman, said business was booming because its wealthy customers felt more confident about spending their money amid strong global growth. Princess was capitalising on this demand with new models, better technology and improved customer care, he added.
“The macroeconomic situation, other than recent rumblings of trade wars, is one where the market continues to grow and people are feeling very optimistic,” Sheriff said. “We are going to increase production by about 25% and we have hired 500 new people to meet exploding demand.”
He said the pound’s fall since the 2016 Brexit vote had made his firm’s boats more attractive for international buyers. The Trump administration’s tax cuts have also brought the US market back to life, Sheriff added.
“If someone is paid $1m a year and instead of being taxed $400,000 they are taxed $300,000 they know they are going to make more money and, if they already have the inclination, they will go out and buy a boat.”
Princess’s range starts at £300,000 for the V40, a 13m motor yacht with two double cabins. Its most expensive model is the 40m, three-deck 40M, which costs £15m, or £18m including VAT if bought in the UK. Princess delivered one 40M last year and sold two more.
Sheriff declined to give examples of his customers, describing them only as “rich people”. He said: “We don’t tend to have customers who like to show off their boats moored in marinas with flashing lights.”
Orders are strong in Europe, Hong Kong, the Middle East and South East Asia, with interest picking up in mainland China, he added. Despite Britain slipping down the global growth rankings, UK orders are steady but Russia and Ukraine have less demand.
Princess’s growing order book highlights the growing disparity between the rich and the global poor. Sheriff said more people were becoming wealthy, adding: “Once you’re in that category you can afford to buy a yacht”.”
With US sanctions imposed on Russian oligarchs and heightened concern about the UK’s role in absorbing Russian wealth, Sheriff said: “We do know-your-customer very carefully on all our customers to make sure we stay within the realms of the law.”