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Thread: Feeling The Pandemic Pain At Beneteau

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    Feeling The Pandemic Pain At Beneteau

    Groupe Beneteau reveals full impact of Covid as it reports 2019-20 nine month revenues; announces new strategic plan
    July 09, 2020

    Boat business down 43.3% - new strategy in place to cope with Covid aftermath with cuts in production planned

    Groupe Beneteau has revealed it latest financials and a new strategy to cope with the ‘new normal’ in an investors call this evening.

    Following first-half growth of 4.8%, the Group’s revenues for the third quarter, affected by the Covid-19 health crisis, came to €249.3 million, down 42.6% compared with the third quarter of the previous year. This contraction reflects the temporary shutdown of production for half of the quarter, before gradually starting up again due to the strict health constraints.

    The Boat business is down 43.3%, while the Housing business is reporting a drop of 39.4%.

    As a result, consolidated revenues for the first nine months of FY 2019-20 totaled €768.7 million, down 17.3% year-on-year and 17.9% at constant exchange rates. The Boat business is down 17.8%, while the Housing business, which was able to start its shipments up again slightly more quickly, recorded a 15.4% decrease compared with the same period in 2019.

    As all of the Group’s plants were temporarily shut down due to the health risks, the contraction in revenues concerns all the segments and regions, which all show a downturn in business at end-May 2020, with the exception of fleet sales, which are up 26.8%, thanks to an excellent first half of the year (+60%).

    On a reported basis, North America (-22.4%) was slightly less affected than Europe (-26.6%), despite a significant drop of -46.6% for the American brands. The contraction for other regions around the world came to -19.5%.

    Beneteau Boat Revenues - 9 months
    Regions FY 2019-20 FY 2018-19 Change - Reported data Change - Constant Currency
    Europe 292.9 399.3 -26.6% -26.6%
    Americas 154.7 199.3 -22.4% -24.6%
    Other regions 46.5 57.8 -19.5% -19.8%
    Fleets 129.0 101.7 26.8% 26.7%
    Total Boats 623.2 758.1 -17.8% -18.4%
    For the first nine months of the year, the downturn for motorboat segments (-21.7%) shows contrasting trends: the decline was limited for 30 to 60-foot outboard and inboard motorboats, but significantly more marked for the inboard (under 30 feet and over 60 feet) and jet segments.

    Sailing revenues are down 13.5%, offset in particular by the fleet sales performance mentioned previously.

    At end-May 2020, the Sailing and Motorboat segments each represent 50% of revenues for the Boat division.

    Outlook for FY2019-2020
    The gradual resumption of operations, ramped up from early May, will not be sufficient to make up for the lack of production during the six weeks of the shutdown. Combined with the order cancellations and deferrals recorded by the Boat business, particularly from charter firms, 2019-20 full-year revenues are expected to contract by 16% to 18% on a reported basis compared with the previous year.

    The Housing division expects its full-year revenues to come in 13% to 14% lower than 2018-19.

    In this context, the Group estimates that its full-year revenues will contract by 16% to 18% on a reported basis, with an EBITDA margin of over 8% and income from ordinary operations above breakeven.

    New strategic plan
    Groupe Beneteau has further strengthened the strategic plan that it initially drew up during the first quarter of 2020 in order to move more quickly and go further with its adaptation to the period that is taking shape. A more developed financial breakdown of this plan will be presented in autumn 2020, when the Group releases its full-year earnings.

    The Board of Directors has approved the plan proposed by the Executive Leadership Team, based on the following key pillars:

    A strategy built around eight global brands – compared with 12 previously – covering the same number of markets segments with reduced investment thanks to their complementary features and specific positionings;
    A better level of efficiency for the plants and an acceleration of development times, by specializing industrial assets and adapting product development resources in line with the Product Plan;
    A more streamlined managerial organization structured around global core functions.
    House of Brands

    House of Brands

    Beneteau’s new strategy focuses on a ‘House of Brands’ consolidating 12 brands to 8 and focused on 4 distinct boat segments: Dayboating, Real Estate on the Water, Monohull Sailing, Multihull Sailing

    This evolution is fully aligned with the Group’s commitment to being a pioneer for sustainable recreational boating.

    Moving forward, the plan also includes measures to expand its portfolio of downstream activities to include services, in synergy with its distribution networks. The Group’s future investments will be focused to a great extent on the digitalization of its activities (Band of Boats transaction platform, CRM, configuration feature, connected boats, etc.) and its processes (ERP, etc.).

    First phase of plan - adapting with Covid
    The post-Covid 19 crisis is bringing in a new economic cycle. During an initial period, from 2020 to 2021, the sharp contraction in activity worldwide, which is being observed, will affect the recreational boat market. This is expected to be followed by a significant upturn, whose scale will depend on how quickly the health crisis is resolved.

    With over €600 million of shareholders’ equity at February 28, 2020 and €300 million of undrawn confirmed credit lines, which will be further strengthened with a €120 million State-backed loan, and zero net debt, as well as its experience managing previous crises, the Group is therefore preparing to take on board changes in volumes, initially falling then rising, potentially on a similar scale to that seen with the 2008-2009 crisis.

    In view of this, it plans to significantly scale back its production capacity over the coming months, while reducing all of its fixed costs. Discussions are underway with the employee representative partners in France and other countries.
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    Beneteau builds HOUSING? Who knew?

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