Princess Yachts faced a disappointing financial performance in 2023, which was not entirely unexpected given the circumstances.
During the period, the yacht builder reported a turnover of £310.5 million, experiencing an operating loss before exceptional costs of £45.6 million in 2023.
The accounts for the year ending December 31, 2023, revealed an EBITDA loss of £48.3 million, a significant increase from the £23.1 million loss in 2022.
Before tax, the company recorded a loss of £65.3 million in 2023, compared to £43.5 million in the previous year. The gross margin for 2023 was at (14.3%), a decline from (9%) in 2022. Princess Yachts closed the year with a cash balance of £15 million.
2023 marked a crucial year for Princess Yachts as KPS Capital Partners emerged as the majority shareholder.
According to the company's strategic report, the acquisition by KPS came after a challenging trading period characterized by a surge in demand in 2021 and 2022, offset by significant cost inflation and supply chain disruptions. These challenges resulted in a loss of volume and inefficient yacht construction.
Working Capital Requirements
The investment from KPS included an initial equity/cash injection of £53.7 million, which was utilized to cover transaction costs and address working capital needs, including clearing supplier debts. The investment also aimed to kickstart a program to enhance productivity levels and mitigate the impact on customer commitments and the financial results of 2023.
Following the investment, the ownership made changes to the leadership team, appointing a new CEO and introducing four new directors.
In 2024, Princess Yachts made the decision to reduce support staff, with cuts in production staff anticipated to follow suit.
Princess Yachts' strategic report acknowledged the challenging operational environment inherited from the acquisition, leading to the disappointing financial performance in 2023.
The report highlighted the company's commitment to product development, with the introduction of three new boats in 2023 and a continuous five-year plan that involves launching three new models annually.
In 2023, Princess Yachts allocated £12.6 million to product development, a decrease from the £14.7 million spent in 2022.
With an order book exceeding £750 million extending into 2026 for certain product lines, Princess Yachts remains optimistic about its future. The company also emphasized its strong global distributor stock position at the end of the year, providing a solid foundation for operational improvements and increased profitability.
The disappointing financial performance of Princess Yachts in 2023 reflects the challenges faced by the company, but strategic initiatives and a robust order book position it well for future success.
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