OPINION: Ferretti float sinks … but not without trace


Launching an IPO is a lot riskier than launching a yacht, as Ferretti Group demonstrated yesterday. Ferretti has given up its plan to sell 30% of the company on Borsa Italiana.

Ferretti had been hoping to list at between €2.5 and €3.7 a share – which could have valued the company at more than €1 billion. On Tuesday, it cut the price range to between €2 and €2.5, which would have valued it at $580 million ($640 million) before pulling the float completely. The company now says it is looking to sell part of the company to a single investor.

Ferretti’s decision is not helpful to rival yard Sanlorenzo, which is also hoping to float in Milan. In fact, it is a real blow. A successful Ferretti float would have helped enormously, analysts and investors like to be able to compare stocks.

But both of them have provided a lot of date for anyone interested in the economics of building yachts.

€3.6 million of extraordinary costs

Sanlorenzo has sales of €327 million with earnings of €38 million (including €3.6 million of extraordinary costs) – a 11.6% margin. The yard says it will do even better this year. It has already had sales of €205 million in the first six months of the year to June and is aiming to do between €430 million and €568 million for the year as a whole, with a 14%-15% margin.

Large 40-metre to 68-metre aluminium and steel superyachts made up 31% of sales, with composite 24-metre to 38-metres yachts making up 62%. Sanlorenzo’s Bluegame sports utility yachts (at lengths of between 13 metres to 21 metres) accounted for just 1.8% of the cash.

Ferretti – which owns Ferretti Yachts, Riva, Pershing, Itama, Mochi Craft, CRN, Custom Line and Wally – had revenues of €609 million in 2018. Its earnings before interest, tax, depreciation and amortisation (EBITDA) reached €53 million – an 8.7% margin. Custom and semi-custom yachts accounted for 79% of its sales – although fully-customised yachts are just 33%.

Revenues of €609 million

Both yards rely largely on European customers – they account for 58% of Sanlorenzo’s sales and 45% of Ferretti’s customers. Customers in the Americas account for 19.6% of Sanlorenzo’s sales and 22% for Ferretti.

One hidden bonus is that a flotation raises the visibility of yachting to finance professionals. The Financial Times’s influential Lex Column covered the planned Ferretti float (it correctly warned that fears of recessions might make it harder) – which can lead to increased interest in charters. Even if they cannot buy shares in the company.

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