Brunswick posts 3 per cent decline in sales for Q1
By IBI Magazine
Brunswick Corp today reported sales of US$1.34 billion for its first quarter ended March 29, 2008. That represents a 3 per cent decline compared to the same period a year ago. Its net income declined 71 per cent to US$13.3 million for the quarter, compared to US$45.6 million a year ago. "Sales for the quarter reflected lower demand for marine products, particularly in the United States where industry retail sales were down about 17 percent in units in the first quarter," said Dustan McCoy, Brunswick chairman and CEO, in a statement. "This weakness was partially offset by sales growth from our bowling and fitness operations, as well as strong sales outside the United States in all business segments." Its Boat segment had sales of US$637.8 million, down 9 per cent compared to US$699.0 million a year ago. Brunswick said that the boat division had an operating loss of US$14.7 million compared to operating earnings of US$19.5 million in the same quarter last year. "In response to market conditions, we continued to lower production rates to reduce pipeline inventories held by our dealers," McCoy said. "At the end of the quarter, there were approximately 2,800 fewer boats in our dealers' inventories than at the same time last year. Nevertheless, we had 35 weeks of supply on hand at quarter end, up from 34 weeks of supply a year ago, and we will be making further production cuts in the months ahead." McCoy said that Brunswick has made inroads towards other long-term goals. "We continued to make progress towards transforming our global manufacturing profile to achieve a smaller, more flexible manufacturing footprint as well as rationalising our brand portfolio," said McCoy. "We announced that we will cease making boats at several manufacturing facilities, and we will transfer that production to other plants that will make multiple models and brands to lower our overall cost position and improve capacity utilization." Brunswick's Marine Engine segment reported sales of US$566.0 million for the first quarter, down 1 per cent from the same period a year ago. Its operating earnings were US$30.9 million compared to US$34.7 million a year ago. "Sales from areas outside the United States were up double digits, which helped to mitigate the US sales decline. The US sales shortfall was driven by lower engine sales to boat builders, as well as lower parts and accessories sales, which are tied to boat usage and engine sales," said McCoy. "The decline in operating earnings was primarily due to lower sales of high-margin sterndrive engines as well as reduced fixed-cost absorption on lower sales."
(24 April 2008)
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