GYG order book surges despite Covid disruption
GYG
30.00p
17:09 07/09/22
Superyacht painting, supply and maintenance company GYG updated the market on its trading for the first half on Friday, reporting that following a positive first six months and with the activity scheduled for the second half and into 2021, it was confident that it was on track to meet market expectations for the full year.
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The AIM-traded firm said those expectations had remained unchanged since before the disruption caused by the Covid-19 pandemic.
Despite the disruption caused by the coronavirus outbreak in the first half, the board said that due to management's focus on driving margin improvements and “enhancing the quality” of earnings, it was expecting to report increased adjusted EBITDA of €1.6m (£1.43m) for the six months ended 30 June, up from €1.5m year-on-year and equating to a 22% increase in the adjusted EBITDA margin.
The directors said they were confident that the improvement in margin was sustainable, adding that there was potential for that to be increased further.
GYG said it expected to report first half revenues of around €29.1m, down from €33.1m, though it noted that during the pandemic, no contracts were cancelled and, as a result, most of the associated revenue originally forecast for the first half was delayed into the second.
During the period, the group said it also improved the size and visibility of its order book, and agreed new bank facilities with lenders to further strengthen the balance sheet and provide resilience against Covid-related uncertainties.
As it had previously announced, GYG signed a major new build contract in the first half for an 80+ metre yacht, scheduled to start in the fourth quarter, adding on Friday that it was in advanced negotiations for further new build projects for 2021 and 2022.
Four of the six new build contracts signed in 2019 had either started, or were due to start in the third quarter, which would increase new build revenues through the second half.
As it outlined in its final results on 22 July, the group experienced strong sales momentum in the first half with the signing of several major refit contracts for immediate start, increasing refit revenues during the “traditionally quieter” summer months.
That included two contracts with a combined value of over €6m, with MB92 Group in Barcelona and La Ciotat, and a 70+ metre yacht in Palma, with work on those vessels already beginning.
In addition, GYG said a further contract had recently been signed with MB92 Group for a 100+ metre yacht, with work there expected to start in the later part of the third quarter.
The group's supply division, Pinmar Yacht Supply, had a “solid” first half, winning several new contracts as a result of the targeting of larger yachts for global supply.
As a result of those actions, GYG said its order book stood at €42.7m as at 30 June, up from €38.6m year-on-year.
“Despite the challenges that the Covid-19 pandemic has presented, the group has had a good first half with no projects cancelled and a significant increase in refit work over the summer months, which tends to be a quieter time due to normal Mediterranean cruising patterns,” said chief executive officer Remy Millott.
“Most importantly, despite lower revenues in the first half compared to 2019 and the disruptions encountered in March and April, we have taken the opportunity to continue further restructuring of the group, which has resulted in significantly improved margins.
“This has enabled us to be confident that we are on track to achieve what we had expected to at the start of the year, despite the disruption caused by the Covid-19 pandemic."
Millott said the second half had started well, with the positive momentum from the first half being maintained through the summer and into the third and fourth quarters.
“The order book remains strong and the team is working on a number of potential leads that will further strengthen this through the second half while maintaining our keen focus on gross margin improvement.
“The board remains confident that the group is on track to meet market expectations for the full year and continues to look to the future with confidence.”
GYG said it would report its interim results for the six months ended 30 June on 24 September, and would update the order book again then.
At 0852 BST, shares in GYG were up 1.03% at 78.3p.