Boat builder cruises into black after years in red

The commercial and government sectors have become the strategic focus for the amphibious boat manufacturer. Photo / Dean Purcell

Listed amphibious boat-maker Sealegs' announcement of its maiden profit may come as a surprise to its critics after years of consistent losses.

The North Shore manufacturer - which builds boats capable of travelling at up to 75 km/h on water and 10 km/h on land - reported an unaudited operating profit of $642,000 in its 2010 result, a 174 per cent improvement on a $869,000 loss in the previous reporting period.

The boats sell for around $100,000 each.

Sealegs' share price soared 9c, or 53 per cent, to 26c following news of the profit yesterday.

Sealegs chief executive David McKee Wright said after bearing years of cynicism about the company's performance he felt vindicated by its latest result.

"We've got no doubts," he said. "We know we have an amphibious boat engine market that exists ... Sealegs can make a boat that works and we've got a business that can be profitable."

Shareholders' Association chairman Bruce Sheppard, who has referred to Sealegs as "Seadog" in the past, acknowledged the firm's achievement yesterday, but said it came five years too late.

"On a time value of money basis it's a booby prize, but it's better to win a booby prize than no prize," he said.

McKee Wright said the profit was achieved despite tough market conditions, with prospective customers unable to secure the finance they often used to buy boats.

"The market we were operating in was destroyed ... people just stopped buying."

But Sealegs, which was founded in 2002, still managed to sell 103 boats during the 2010 financial year, down from 105 in 2009.

Improved margins obtained through successful cost-cutting meant the firm was able to turn flat year-on-year revenue into profit.

McKee Wright said Sealegs held its own during the recession through expanding internationally and focusing on growing its output of rescue boats.

The Malaysian Government had bought 15 boats that were being used in flood rescues during the monsoon season. Four boats had also been sold to the Mumbai Police Department, which wanted to increase its seaborne response capacity after the 2008 terrorist attack on the city.

McKee Wright said recreational sales were performing well, but the commercial and government sectors had become the new strategic focus.

"[The Government sector is] not affected by recession and economic slowdowns - governments need to respond to flooding, governments need to respond to terrorism."

He said the company's IP - its wheel and onboard engine system - was patented in a number of countries, which meant the firm did not suffer from any direct competition.

Kiwi yachtsman Chris Dickson, a member of Sealegs' board of directors for the past two years, said it had been great to see a start-up turned into a profitable business. "[Sealegs] is a lean, mean fighting machine," he said.

McKee Wright said 450 Sealegs boats could now be found in 25 countries worldwide, with 35 on Waiheke Island alone.