Grand Banks Yachts (GBY) expects its 1QFY22 revenue to decline 53.3% to $11.5 million y-o-y, due to the prolonged shutdown of its manufacturing facility.
In a filing, GBY CEO Mark Richards says the three months ended Sept 30 was a challenging quarter, as the company faced several disruptions to operations at its manufacturing facility in Pasir Gudang, Johor, in compliance with the Movement Control Order.
See: Grand Banks Yachts halts operations at Pasir Gudang yard due to MCO
Due to this, GBY was not able to progress on the construction of pre-sold boats. Meanwhile, the fixed overhead costs, which were still accruing while the factory was shut down, resulted in unabsorbed manufacturing overhead costs, says Richards.
Coupled with uncertainties in the shipping industry, GBY made additional accruals to freight costs that are expected to result in a negative gross profit for 1QFY22.
“Consequently, the company will record a loss for 1Q FY2022. With the resumption of boat construction activities since mid-Sept 2021 and the backlog of orders on hand, the company hopes to recover its financial performance in FY2022,” says Richards.
Despite the disruptions to operations, the global yachting market is seeing an increase in demand for luxury yachts amid border restrictions during the pandemic.
GBY participated in two boat shows In the US, where much of the Covid-19 measures have been lifted. The company also participated in a boat show in Cannes, Europe whilst continuing its digital marketing and other online sales initiatives to drive new boat orders.
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In 1QFY22, GBY booked 11 new built-to-order boat orders, totalling $43.8 million. This lifts the net order book to an all-time high of $152.5 million as at Sept 30, compared to $62.1 million recorded in the same period in the preceding year.
“While continued disruptions in sea freight are expected to increase freight costs to transport yachts to our customers, the company is closely monitoring the situation and is taking steps to minimise this potential impact.
“With the Pasir Gudang yard in full operation since mid-Sept 2021, the company expects to catch up on its production and revenue-generation as yachts are constructed and delivered,” says Richards.
Shares in GBY closed 1 cent or 3.4% higher at 30 cents on Oct 27.
