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Champion sailor turns Grand Banks shipshape

Luxury boat maker nets 10-year record profit on stronger sales and better margin.

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"The whole thing is almost a textbook turnaround... It's about taking full ownership of the company in every respect and controlling our destiny,"says Mr Richards.

THE regatta - it appears - never ends for champion sailor Mark Richards.

He has snatched eight wins in the quintessential Australian summer sport - the Sydney to Hobart yacht race - as the skipper of Wild Oats XI. In the mid-90s, he switched course from professional sailing to building luxury boats.

That Sydney-based business, Palm Beach Motor Yachts, founded by Mr Richards was bought out in 2014 by Singapore-listed Grand Banks Yachts - a company that is majority owned by Malaysian casino and leisure giant Genting Group after it emerged as a "white knight" in 2012 to help fend off a hostile takeover amid a board and leadership flux.

What had accompanied the A$10 million (S$9.76 million) buyout of Palm Beach would prove to be a lifeline that was sorely needed by Grand Banks that had been sinking in the red for five straight years - Mr Richards ended up owning 6 per cent of the boat maker and became its helmsman.

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That same year, the rudder had turned with Grand Banks ridding itself of the Singapore Exchange's dreaded watchlist label which it had endured for four years.

Fast forward four years later, and the company has made a splash with its latest scorecard for the year ended June 2018, bringing in a 10-year record net profit of S$9.5 million versus S$521,000 a year ago as revenue jumped 42 per cent to S$83 million, thanks in large part to stronger boat sales owing to a fresh product line and better margin (from low teens five years ago to 25 per cent now) as well as tax credits.

"The whole thing is almost a textbook turnaround. The global financial crisis of 2007 to 2008 hurt demand and Grand Banks had lost its way," recalls Mr Richards.

"I basically walked in on Day One and tipped the whole thing upside down," he says, adding that Grand Banks had a "good little business" with an "amazing 60-year legacy" but there were major cracks, chiefly on the production side.

Legacy

First set up in 1956 and based in Hong Kong, Grand Banks was originally called American Marine. Two decades later, it was incorporated in Singapore and was listed on Sesdaq (Singapore's junior board then) in 1987 as GB Holdings, six years after which it was upgraded to the Singapore Exchange's mainboard; in 2004, it began calling itself Grand Banks Yachts.

The maker of two brands of sleek power boats which range between 42 and 65 feet called Grand Banks and Palm Beach, counts the United States, the world's biggest boat market, as its top buyer - it made up 75 per cent of 2018 sales - followed by Australia. It has two manufacturing yards at Pasir Gudang in Malaysia's southern state of Johor and another in Berkeley Vale, Sydney, Australia.

While the "very desirable" Palm Beach product line has become the "backbone" of the company, the Pasir Gudang facility that spans 300,000 square feet and has been overhauled in recent years is quite clearly the group's biggest pride and joy.

That wasn't always the case, though; when Mr Richards first took on the chief executive role, the yard was a "mess" with leaky roofs, poor layouts and substantial man-hours spent, all of which had drained efficiency.

Mr Richards shaped Grand Banks' recovery much in the way he designed all its boats since.

"I designed everything myself . . . all the ideas are mine and it's not just the boats but also the office," he admits.

Under a major facelift of the yard, its ergonomics was improved.

"We squeezed the lemon as tight as we could to get everything out and to stop the rot. But it's hard to measure everything. It's cooler and breezier which is a big deal for the workers . . . all that contributes to better moments," he says.

Post overhaul, the facility was upsized by 40 per cent while the production cycle was significantly shortened by getting the yard's robotics up and running. Then, the sales network was revamped.

Grand Banks gave up its previous dealer network which was "eating us alive" (the company was foregoing some 25 per cent of every boat sales) and opted instead for a factory-direct sales model to better enjoy the fruits of its own labour.

"It was a very gutsy call but in sales, if you want to do the job properly, do it yourself. It's starting to pay dividends.

"It's about taking full ownership of the company in every respect and controlling our destiny," he says, with unmistakable pride.

As at June 2018, the firm's order book stood at S$32.8 million with some fresh orders for 22 new boats logged in for 2018.

As niche as the sector may be, Mr Richards says it is one that is crowded and bursting with competition with a "lot of money" looking for high-quality boats.

Yachting fever

Interestingly, while the yacht market for Asia may be low, post-subprime crisis when big names in the yacht space turned distressed, many Asian corporations, particularly deep-pocketed Chinese behemoths, seemed struck by yachting fever and began to invest in the sector.

In 2012, Chinese conglomerate Weichai picked up a controlling stake in Italy's Ferretti Group. A year later, China-based Wanda Group acquired leading British luxury yacht maker Sunseeker and in 2016, Hong Kong conglomerate Lai Sun Group acquired nearly half of Camper & Nicholsons International.

On its part, the Genting Group, led and controlled by one of Malaysia's richest Lim Kok Thay, also owns a stake in Italian shipyard Wider Yachts and U-Boat Worx, a luxury submarine maker.

Fresh from launching the GT50, a high-speed and super-efficient yacht that, according to Mr Richards, uses about "half the fuel (consumption) of any boat in the world", the group is currently building the Grand Banks 52 (GB52) - a new long-range cruiser, which will debut in 2019.

Last year, it launched the GB60 - one of its highly popular boats and sold 10 of its flaghip boats within the first year.

It is also no accident that Grand Banks scooped up 12,000 sq foot facility Stuart Yard in Florida, which has seven berths and a floating workshop, in May this year to consolidate its presence in the US. It has its eyes set elsewhere too - Europe - with plans to set up its first office in Cannes next year.

Pleasure boats aside, Mr Richards says Grand Banks is also looking at "commercial options", namely at making border patrol vessels to diversify its income.

"High-speed and long-range stuff in the military or coast guard space does not exist today and if we can develop that product properly, it will be relatively low risk as we will be utilising what we already have (the Pasir Gudang facility which is currently 40 per cent utilised)," he says, adding: "It's on the drawing board . . . and could happen in next couple of years."

After protracted choppy weather and having "climbed out of the hole", Grand Banks appears to be cruising at comfortable speed.

Mr Richards, the man responsible for the group's turnaround and blue-skies outlook seems understandably pleased: "I didn't know that I had it in me. I guess opportunity breeds opportunity and you just start and it snowballs from there. It's been really cool."