Grand Banks Yachts sails back to the black with $1.2m profit for Q1

SINGAPORE - Mainboard-listed Grand Banks Yachts swung to a net profit of $1.2 million for the first quarter ended Sept 30 compared to a net loss of $1.3 million for the year-ago period.

The builder of luxury yachts said net profit rose after introducing initiatives to integrate design, production and marketing following the acquisition of Palm Beach Motor Yacht Co Pty Ltd of Australia, which was completed on Aug 1 last year.

Since the acquisition, the group has aligned production between facilities in Malaysia and Australia. It migrated production of certain Palm Beach models to Malaysia where costs are lower. It also streamlined operations, increased training and introduced new boat-building equipment.

It also adopted a factory-direct sales model in North America, which not only delivered a better customer experience but also significantly lowered distribution costs, said the company. It also benefited from the strengthening of the US dollar - the currency in which at least half of the group's boat sales are denominated - against the Australian dollar and Malaysian ringgit.

Revenue for the first quarter more than doubled to $14.0 million from S$6.5 million a year earlier, due to progressive recognition of orders - which included revenue contribution from the first two Palm Beach yachts being built in Malaysia.

Together with improved internal efficiencies in two manufacturing locations, this helped lift gross profit margin to 24.5 per cent from 9.5 per cent year-on-year.

Earnings per share reversed to 0.66 cent for the first quarter from a loss of 0.70 cent a year ago.

The group's accumulated net order book stood at $32.1 million as at Sept 30 compared to $17.5 million a year ago, after adding five new orders from recent boat shows.

In the quarter under review, Grand Banks participated in the Newport and Norwalk boat shows in the US, and will take part in next month's Fort Lauderdale International Boat Show 2015 - the world's largest boat show.

Said Heine Askaer-Jensen, chairman of Grand Banks: "The latest quarter reflects initiatives undertaken in the past 12 months which will assist us in enhancing shareholder value, moving forward."

Barring any unforeseen circumstances, the company said it expects its performance in the current fical year to improve significantly compared to the previous year.