Advanced marine propulsion and stabilisation system developer VEEM (ASX: VEE) has signed an exclusive agreement with nautical engineering company Sharrow Engineering. Together, VEEM and Sharrow will design and then VEEM will exclusively manufacture and sell Sharrow propellers worldwide up to five metres in diameter for inboard motor vessels to improve fuel and cost efficiency.
This comes as Sharrow Marine raised over $46.6 million in series funding in June to expand its manufacturing capacities, particularly in the realm of its propellers. Sharrow’s patented and award-winning MX Propeller is already well-known among big names in outboard manufacturing, including Yamaha, Honda, Suzuki, and Nissan.
Sharrow and VEEM are collaborating to create a series of propeller designs for inboard motor vessels that utilise Sharrow’s patented technology. VEEM anticipates releasing the first SHARROW by VEEM propellers to customers in early 2024, then introducing additional designs as they are developed and tested.
By the end of 2024, customers will have access to a broad selection of propellers tailored specifically for inboard motor vessels. Like VEEM’s existing propeller range, each propeller will be custom-made to meet the customer’s requirements.
VEEM Chairman, Brad Miocevich, said, “The Sharrow propeller technology has revolutionized the outboard motor market, and we are honoured and very excited to have reached [an] agreement with Sharrow to be the exclusive worldwide manufacturer and seller of the SHARROW by VEEM propellers for the inboard motor market. We look forward to demonstrating the significant benefits of this new product to our existing and future customers.”
The worldwide boating sector is actively trying to become more sustainable and energy-efficient, and these designs represent a significant stride in that direction. Moreover, these advancements offer boat owners the added advantage of improved comfort through reduced noise and vibration.
The overall target market for VEEM and Sharrow includes all propellers below five metres in diameter used for inboard vessels. Generally, these vessels start at 30 feet and can reach 300 feet for a superyacht. The main volumes VEEM is targeting initially are in the 30 to 90-feet range, where there are premium production yacht manufacturers.
Commercial operators are expected to choose SHARROW by VEEM propellers primarily for fuel efficiency benefits. An independent market study found a potential market size of 100,000 vessels, valued at approximately $4.04 billion, with an annual market of 15,000 new boats, totalling around $525 million. However, these propellers will be priced higher due to increased production costs and licensing fees to Sharrow. But seeing Sharrow’s brand popularity, the price might not have a dampening effect.
VEEM has the exclusive global rights to make and sell Sharrow propellers for 17 years (or longer if patents extend beyond that), provided it meets the minimum sales requirements during the initial three years and annually thereafter. Failure to meet these criteria can revoke exclusivity, with VEEM also paying a license fee based on SHARROW by VEEM propeller sales to Sharrow.
Initially, VEEM will produce SHARROW by VEEM propellers at its Western Australia facility, with a monthly capacity of 450 to 500 propellers. These initial production quantities are anticipated to be absorbed by boat manufacturers and commercial operators due to high demand.
In FY23, VEEM saw its net profit grow by over 226% on FY22 to $4.1 million as its propeller sales increased and it signed more such exclusive agreements. The Sharrow agreement propels the Company closer towards financial growth.
Alinda is a Business Reporter for The Sentiment
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