High-income Brazilians prefer to buy luxury ships than mansions, says Ferretti

For the Italian group Ferretti, a traditional manufacturer of luxury ships, which has more than 60 years of history and went public this year on the Hong Kong Stock Exchange, Brazil is not only an exciting market. It is fundamental for the future.

That is why the company is increasingly active in the country, where the demand for luxury yachts is growing significantly.

“The Brazilian market is in a very positive moment. We are growing a lot; we have already closed sales for all 2023. The orders for next year were outstanding. And it will probably be one of the best years for the yacht industry in Brazil,” explains Ferretti’s COO, Stefano de Vivo, in an exclusive interview with EXAME.

Ferretti is one of the companies present at the São Paulo Boat Show 2022, the largest nautical event in Latin America, exhibiting its luxury yachts, whose value oscillates between R$15 million (US$2.8 million) and R$30 million, depending on the configuration.

De Vivo received EXAME at Ferretti’s office in São Paulo, in the district of Itaim Bibi, together with other executives from the company and Nércio Fernandes, a shareholder of Okean, a Brazilian company with which the Italian group signed an agreement for the production of ships directly in Brazil.

“The world is changing quickly, and the Brazilian market is also changing. Now, being at the beach is no longer a choice; it is necessary. People want more privacy and more space, and they get that with a boat.

“The pandemic changed everything in our industry. Many more people sought out our yachts for more privacy,” explains de Vivo, who demonstrated optimism with the operation in Brazil, even with a more complicated domestic market, in a year of elections, high inflation, and international turbulence.

The numbers confirm this perception: orders increased more than 100% between 2022 and 2023, from 8 to 18 ships. And the prospects for 2024 also seem positive.

For Fernandes, Brazilian production is prepared to absorb this new demand.

“During the pandemic, we did our homework. We moved from São Paulo to Itajaí in Santa Catarina state and increased our production plant.

“We did everything necessary to prepare for the market that is to come. It was a great challenge, but it is worth it,” explains the entrepreneur.

FERRETTI’S HISTORICAL PRESENCE IN BRAZIL

Ferretti has been present in Brazil since the 1980s, together with a local partner that distributed the yachts. The success was very fast, so much so that it was considered the third best known in the luxury market.

“However, because of the economic crisis of the period 2014-2016, and the consequent devaluation of the real, the partner company ended up closing its doors, and for Ferretti it was a very complicated time. We had to leave the market.

“Now, we have decided to come back without direct participation in the company, but we supply Italian design, technology, engineering, and materials.

“This is because of the high customs taxes, which complicate the operation, but also because Brazil is a large market, so it makes a lot of sense to be present there,” says de Vivo.

The Italian company took years to close the partnership with Okean after much study and research on the technical capacity and reputation of the Brazilian manufacturer.

“It was a long courtship, of more than three years, but in the end, we are all satisfied with the result,” explains Fernandes.

“The competence of the Okean employees is impressive. Even during the pandemic, when everything became more complicated, they were able to assemble the parts sent from Italy without our face-to-face support. It was incredible,” de Vivo points out.

Okean’s plant in Itajaí has 250 direct employees and 60 indirect ones. But it plans to reach 420 direct employees and another 180 indirect employees in two years.

“Brazil is a warm country; it is possible to use the ship all year round. That is why demand is so high.

“Many people prefer a yacht over a mansion on the coast because the view is often more beautiful, it is safer, and you can change locations whenever you want, without being ‘stuck’ on the same beach.

“And, of course, when you invite someone to spend a weekend on a luxury ship, it is impossible to get a ‘no’,” Fernandes points out.

BRAZILIAN CLIENTS ARE INCREASINGLY DEMANDING

In Brazil, most of Ferretti’s clients are concentrated in São Paulo, with 40% of the orders, followed by 30% in Santa Catarina and 30% in Rio de Janeiro.

The profile of this customer is becoming increasingly demanding, with ships exceeding 100 feet in length.

“People are deciding to buy a ship to have, in fact, a private island,” explains de Vivo, “The ships are getting bigger and bigger and more and more luxurious. “Basically, seven-star hotels.

“Brazilians, in particular, like ships with five bridges, which can accommodate 12 to 25 people, depending on where you sail.”

According to Fernandes, during the pandemic, the search for luxury ships increased considerably, as many people could hold video meetings directly from the boat itself.

“This was even positive for the crews, who were sailing for three or four months, protected from the virus, and at the same time receiving their salaries,” says the businessman.

In addition, technology is helping this sector grow more and more, with stabilization mechanisms becoming “as common as air conditioning in cars,” avoiding excessive swells and making many people more willing to buy a ship.

“People’s lives at sea are becoming simpler and similar to life on land,” explains de Vivo.

THE LACK OF MARINAS IN BRAZIL IS STILL A PROBLEM

There still are obstacles to the development of luxury boating in Brazil. The first is, without a doubt, the lack of marinas. In the almost 8,000 kilometers of coastline, there are only 16 marinas.

“The presence of few ports in Brazil is a problem. There is a climate against the construction of marinas in Brazil because of excessive regulations. And this ends up limiting the development of the nautical industry,” explains Fernandes.

However, in the last ten years, there have been some investments in marinas in São Paulo and Santa Catarina, and in the next few years, up to four marinas should be delivered along the coasts of these states.

“This is a great opportunity, even because marinas create economic development around them, not only for ships. They are places that become magnets for tourists, businesses, and jobs,” explains Fernandes.

INTERESTING NUMBERS FOR FERRETTI

Ferretti is registering promising numbers. In the last half-year balance sheet, the company received orders for €641.9 million (US$619 million), up 30% compared to the first half of 2021.

Net revenue was €534.9 million, up 17% compared to the first six months of last year.

In turn, the adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) was €69 million, 30% higher than in the first half of 2021, with an Ebitda margin of 13.5%, up 110 basis points.

Net income was €29.9 million, and the net financial position was equivalent to €415.8 million in cash.

Values that could grow even more in the future, considering the forecast growth of the luxury market in the world and Brazil – a golden opportunity for the Italian yacht manufacturer.

With information from Exame