SINGAPORE (Nov 14): Grand Banks Yachts’ net profit for 1Q19 dipped 10.1% y-o-y to $1.1 million from the group’s restated earnings of $1.3 million on the back of lower revenue and higher operating expenses.

For the 1Q ended Sept, the luxury boat maker reported revenue of $21.6 million, down 10.7% from restated 1Q18 revenue of $24.2 million due to fewer stock boats and trade-in boat sales compared to the previous year.

Total operating expenses rose 29% to $3.9 million from $3 million previously.

The group attributed the higher expenses to commissions, travelling expenses, professional fees and payroll – and said it also recorded higher sales and marketing costs as it entered its annual US boat show season during the quarter under review.

As at Sept 30, the group’s net order book stood at $20.5 million – representing a cyclical low point as the US boat show season only commenced at end-Sept, thus impacting order recognition in 1Q.

Nonetheless, gross profit margin was a higher 25.8% compared to 17.9% in 1Q18, attributed mainly to an improvement in manufacturing efficiencies redeveloped yard in Pasir Gudang, Malaysia.

In all, Grand Banks Yachts deems its results for 1Q a positive start to FY19, and attributes this quarter’s net profit to a good quarterly sales mix, improved production capabilities, and healthy profit margins.

Apart from receiving three additional orders subsequent to 1Q19, the group believes its short-term initiatives will lay an even stronger foundation for long-term growth as it continues to monitor its operating costs closely, and will strive to further optimise operational efficiencies in the year ahead.

“As a boat-building business, it is important that we invest in our people, our portfolio and our processes to lay a strong foundation for long-term growth. We have planned a very exciting pipeline of new yacht releases and look forward to shipping these out to our valued customers,” says Mark Richards, CEO of Grand Banks.

Shares in the group closed flat at 30 cents on Wednesday.