The largest luxury yacht maker in Britain has suffered a £30m (£20m) loss due to severe supply issues that prevented it from completing production on schedule.
Will Green, the chief executive officer of Princess Yachts said that the company had to scramble for parts in order to finish their boats due the impact the pandemic was having on its suppliers when they started up supply.
In 2021, the entire supply chain was able to work through the stock on the shelves. We didn’t expect the productivity impact that would be delayed by the suppliers returning to their normal routine.
By the end of 2020, we would have used up all the bits available. Then we got hammered.
We thought that things would improve once we got out of Covid. We didn’t expect that the supply chain could be so badly damaged.
Princess Yachts, founded in Plymouth in 1964, is a British company. The boats can be as long as 95ft and cost up to £11m. Lower-end models are priced around £700,000.
Previously, it was owned by L Catterton the American investment firm, which sold it to KPS Capital Partners, a group of American financiers, earlier this year.
Newly filed accounts reveal that revenues at the company increased by £6.9m, to £315.2m, in 2022. However, operating losses increased from £3.7m, to £30m.
Mr Green said: “We have a billion dollar order book and hundreds of clients who have given us their money for us to build a boat. But we’ve not just been unable to get them out the door.”
He said that the company was struggling to obtain “anything with an embedded chip” due to a global shortage in semiconductors as well as engines, generators and other components.
The most painful thing was the lack of engines and generators. These are big pieces of equipment that every boat needs. “Of course, if the engines aren’t available, you won’t be able to build boats.”
The company has also been forced to deal with a shortage in teak wood, which is used on the decks on its boats. This was due to sanctions placed on Myanmar after a military coup took place in the south-east Asian country on February 20, 2021.
The whole industry is looking for alternative sources of teak. “Being one of the largest builders in the World in terms of number of boats, and size of boats we build these issues are only exacerbated,” said Mr Green.
He said that the supply disruption is lessened in 2023, but not entirely over. “It has improved this year but there are still some major problems.”
He said that he believed Covid had “a long term positive impact” on the demand for yachts.
“The lasting impact is that people are much more aware of mortality, or to put it another way, they’re mindful of their own mortality. People are still impacted by the fact that they can’t bring their wealth with them if they have any.
“We see new people entering the industry that want to spend more time with family and enjoy themselves. A luxury yacht is an excellent way to do this if you have the means to own one.”