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Boatbuilder Sealegs margin boost counters soft sales in Australia, Europe

Tuesday 29th November 2016

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Sealegs, the amphibious vehicle maker, says increased margins have helped counter soft sales in Australia and Europe. 

The Auckland-based company said it invoiced for 44 boats in the six months to the end of September, compared to 54 in the comparable period a year ago. This was due to consistent growth in the United Kingdom and New Zealand, although performance across the Tasman and in continental Europe was "softer than anticipated."

Demand from Asia is described as strong, led by Malaysia and centred around first response and flood rescue craft. 

The fall in the number of boats produced is reflected in revenue, which fell to $8.36 million from $9.3 million in the previous year, a fall of 10.1 percent. Improvements in efficiency which saw all expenses squeezed lower than the previous year meant earnings before interest, taxation depreciation and amortisation rise 17 percent to $650,050 from $554,965. 

Net profit after tax rose slightly to $374,881 from $368,490, a rise of 1.7 percent. Management have told investors they view EBITDA as the primary performance metric of the business. 

Chief executive David McKee Wright said the result "continues a positive trend of improved profitability and cash flow. The OEM hull strategy, coupled with ongoing efforts to improve operational efficiency, delivered an additional 3 percent gross margin."

The company's newly adopted original equipment manufacturer (OEM) hull strategy, where Sealegs makes a hull fitted with its own technology which gets used by another company, enables it to use an existing manufacturers' scale to reduce fixed costs. 

No mention was made in the update to investors of its legal action launched in September against Orion Marine and Smuggler Marine whom it accused of infringing its intellectual property. 

Shares in Sealegs rose 5.2 percent or half a cent to 10 cents. They've fallen 13.6 percent so far this year.

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