25 May 2012

YCO sailing off course

25/11/2011 Ben Jaglom

Yacht broker YCO Group (YCO) has issued a profit warning in which it cautions it expects full year profits to be 'significantly lower than market expectations'.

The AIM-quoted concern reported that due to the 'challenging market conditions' that have resulted in a 'significant level of cost and investment' and a 'delay of certain contracted revenues' full year profits will be 'significantly lower' than expectations.

However the company enthused that the 'initiatives and investments' it has undertook have also 'resulted in satisfying operational performance' noting that the number of yachts under management increased in the second half of 2011 while the number of charter weeks booked this year 'will exceed that of 2010.'

Looking ahead it notes it expects a 'breakeven trading position' while remaining confident it can 'increase its market share through 2012 in spite of the economic uncertainty'. Analysts at Arbuthnot have slashed their forecasts following the announcement for the year to December, from profits of £870,000 to break-even.

Recommended by Growth Company Investor last July as a speculative buy at 15p the shares have performed dismally, currently trading at 7.25p having lost 52 per cent of its value since then. Operating a business with lumpy contracts and a relatively small number of high-net worth individuals it counts as customers, the shares are risky fare. We would suggest staying clear for now.

Tags: AIM quoted companies, Charter weeks, Profit warning, Selling yachts, Yachting business

Sector: Travel & Leisure

Companies: YCO Group

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