Plain sailing
Sunseeker’s boss Phil Popham tells of how he helped to turn things round at the yachtmaker
There’s someone at Sunseeker whose job it is to go around replacing the many flags that dot the yacht builder’s Poole sites, flapping in the brisk wind coming off the Channel. “I hate seeing any ripped flags,” says chief executive Phil Popham. “It’s a bone of contention.”
It’s only a minor detail but this change encapsulates the turnaround of the business founded almost 50 years ago. Popham was brought in three years ago, not long after Chinese property and entertainment conglomerate Wanda Dalian purchased a 95pc stake in Sunseeker for more than £300m.
Popham, who came from Jaguar Land Rover (JLR) where he had been group marketing director, is reluctant to say it, but what he found was a firm whose finances were in a mess with demoralised staff following a round of redundancies. Like the flags, Sunseeker had been beaten down.
“The firm had made a significant loss on turnover of about £200m,” says Popham. Sunseeker, whose vessels start at £650,000 and go up to £20m-plus, had been hit hard by the financial crisis. “The market was 70pc down. It’s hard for anyone to paddle through that, if you’ll excuse the pun.”
When your customers are high and ultra-high net worth individuals “you’re insulated to an extent from downturns” says Popham, “but this was something of the like not seen before”. Very quickly Popham developed a strategy to get “back on an even keel” – he smiles at another nautical pun. Cash, working capital, and funding were top of the list.
Suppliers were hesitant, fearing Sunseeker might go under, an embarrassing position for such a prestigious brand.
“We were paying some suppliers on a pro forma basis. When you’ve got a 12-week to 13-month build time you can’t have that,” Popham recalls. “Working capital was funding past losses in some cases.”
Falling back on his motor industry past, where decisions are data driven and cars are on a seven or eight-year planning cycle, Popham said he “had no shame in copying and pasting what I knew worked for JLR”.
With a new chief finance director from Bombardier, the pair worked with suppliers to give them some certainty, agreeing payment terms. The streamlining meant there was no longer a need to sell boats at a heavy discount just to get cash in the door.
A three-year turnaround plan was thrashed out and Popham had the tricky job of asking for guarantees on bank loans to fund new models and improve facilities. “We’ve got strong and supportive owners,” says Popham.
An examination of how boats were constructed to find efficiencies also helped. “We looked at the order we built things in and are now going for a zero-tolerance approach,” says Popham. “Building modules that we can drop into the hull speeds things up.” The strategy worked. Revenues were £252m in 2016 and earnings £6m, a sharp reverse on the £7m loss of the previous year.
“Our turnaround plan has now become a five-year growth strategy,” says Popham. The company is sitting on its strongest ever order book: 2017 production is sold out, about 80pc of 2018’s is nailed down, and almost a third of the following year is spoken for. What attracts Sunseeker’s customers is the yacht’s “distinctive DNA” says Popham. “You know it’s a Sunseeker, the look of the floor-toceiling windows, performance and craftsmanship.”
It has now built more than 120 vessels at over 100ft in length, and claims to be the world’s biggest producer of yachts over 85ft, but as the company’s vessels have got bigger they have moved away from the focus on performance that founder Robert Braithwaite had.
“In the early days, Sunseeker was all about small performance boats, doing 50, 70 knots,” says Popham. “After a good day at sea in St Tropez, having a Sunseeker meant you were the first one back to shore to get the best seat in the restaurant.”
But the move up in size naturally slowed its boats down: costs rise exponentially to get such high speeds out of big, heavy yachts.
Sunseeker is now looking to its past to define its future, with a return to smaller yachts. “Not smaller and cheaper,” says Popham. “But more performance-focused.”
There’s going to be expansion at the other end of the scale, too. “The limitation for us is how big can we build yachts out of glass reinforced plastic?” says Popham, explaining how customers hit the top of the range, and say they want a boat bigger than Sunseeker’s 155ft limit.
“We need to go into steel and aluminium and we need to bring in expertise for that,” he says. “The question is do we do it alone or do it with a partner?”
The company is investing more than £30m in new products but entering this “megayacht” territory will require more support from Wanda.
Popham is confident it will happen. “We know we want to go there, we know we can make it work,” he says. “I haven’t got the answers yet of how we will but we know we’ve got customers who are willing to support it.”
And who are the customers who buy Sunseeker’s products? “It’s not an easy answer,” cautions Popham. It boils down to people who are “clearly affluent – this is a 100pc discretionary purchase”. If there’s one common characteristic, it’s that boat owners “are not a flamboyant group. They are self-made, successful and discerning. They are rewarding their success.”
One of the most pleasurable aspects of Popham’s job is helping prospective owners specify exactly what they want in their vessel. “It’s an emotional purchase. Deciding how they want it to look is not an hour’s job, it’s a day’s job,” he says. “We get to know those people and build a relationship.”
But some need to be reminded that they are buying a boat – and that comes with limitations. “The thing people sometimes don’t realise is that boats float,” he says. “If you want a feature that’s heavy, unless you can find something that balances it, pretty soon you are putting in unnecessary weight to balance it.”
The company says “no” to clients “quite often” Popham says, but the real skill is steering them in a particular direction of what is possible. Solid marble may be out but lightweight honeycomb marble isn’t.
Discussing the pros and cons of multimillion-pound yachts might seem a long way from shifting Jaguars and Land Rovers, but Popham says it’s fate that saw him land at Sunseeker.
In August 2014, he was on holiday in Puerto Banus, Spain. “I was in the marina and took a photo of a Range Rover next to a Sunseeker yacht,” he says. “The yacht was called This Time Next Year and I sent it to a mate because we had a small portfolio of shares and we’d joked that when we made our fortune we’d buy a Sunseeker – something we’d been saying for years.
“Later that afternoon, I got a call from a headhunter asking if I was interested in taking a job at Sunseeker.”
The company’s small size has made it easier to oversee some radical changes and restore a buzz that had long disappeared. “Morale was low, there was no investment, and we were making losses,” he says. “Now we’ve got staff proud to wear their branded workwear in Poole’s pubs.
“It’s a big change.”
A sea change for Sunseeker, even
– as evidenced by the new, pristine flags blowing in the wind.