Devaluation helps Fairline into calmer waters

STERLING'S devaluation last autumn threw a lifeline to Fairline, Britain's only quoted boat builder, which yesterday sailed back into profits of pounds 161,000 before tax for the six months to 31 March, writes John Murray.

That compares with a loss of pounds 613,000 for the first half of the previous year and gives earnings per share of 3p against losses of 11.8p.

But Fairline's shares fell back 42p to 348p, having soared almost 50p on Monday after weekend speculation that profits would be higher.

Sales rose 23 per cent to pounds 15.2m, boosted by foreign buyers taking advantage of the fall in the value of the pound. Domestic sales actually declined 15 per cent while direct exports rose 45 per cent.

Those direct exports accounted for 70 per cent of Fairline's output, but the company's chairman, Sam Newington, estimated total exports at 85 per cent of output because the UK distributor also sells to overseas customers.

Mr Newington said that current order books were similar to last year's but the company was holding more deposits, which indicated that the orders were more firm.

But he was cautious about prospects in Fairline's Continental European markets, particularly Germany, where 30-40 per cent of the company's output goes.

Nigel Hicks, an analyst at Panmure Gordon, said Fairline could be hit by a gap between recession in Germany and recovery in the UK, but the company had weathered the recession well by concentrating on product development.