Brunswick reports lower sales, net loss
By IBI Magazine
Brunswick Corp today reported net sales of US$1.5 billion for the quarter ended June 28, 2008, a 2 per cent decline compared to the same period a year ago. The company also reported a net loss of US$6.0 million for the quarter, compared with net earnings of US$56.9 million a year ago. The second quarter includes restructuring charges of US$83.1 million that Brunswick announced last month. The Brunswick Boat Group had sales of US$687.9 million for the quarter, down 6 per cent compared to the same quarter last year. It reported an operating loss of US$37.7 million, which included restructuring charges of US$38.2 million. "Sales outside of the United States for the segment were up 35 percent in the quarter, which helped offset the effect of both lower unit volume and exiting certain saltwater and high-performance brands," said Dustan McCoy, Brunswick chairman and CEO, in a statement. "Sales also benefited from a shift in product mix, higher prices and contributions from Boston Whaler, Hatteras Yachts and several outboard boat brands. Meanwhile, overall operating earnings for the Boat Group were adversely affected by the restructuring charges, in addition to the effect of reduced fixed-cost absorption on lower production volume." The Marine Engine Segment reported sales of US$643.5 million for the quarter, down 4 per cent. Operating earnings in the second quarter decreased to US$54.4 million compared to US$80.3 million for the same quarter in 2007. "The segment benefited from growth in non-US sales, which were up 10 per cent in the quarter, helping to offset the decline in domestic outboard and sterndrive sales," McCoy said. "As in the Boat segment, reduced fixed-cost absorption on lower production, primarily of sterndrive engines, affected operating earnings for the Marine Engine segment." The segment reported US$17.0 million of restructuring charges in the quarter. "Increased sales of commercial fitness equipment, bowling products and from our retail bowling centers, as well as 19 per cent growth in non-US sales, helped offset the decline in sales of marine products in the United States," said McCoy. "The company continues to generate positive free cash flow, which provides us with significant liquidity and financial flexibility. At quarter end, we had US$393 million of cash, up from US$267 million at the end of the last quarter." McCoy said that, excluding restructuring charges, Brunswick expects to report positive earnings for the year. But he added that the "magnitude of the scheduled production cuts," will result in a loss for the second half of the year. "What we are unable to predict is whether a change in market conditions would necessitate additional production cuts, or the possibility of further write-downs of goodwill or other intangibles," he said. "Heading into the second half, our cash position remains strong, and we are already close to reaching our year-end target of US$400 million, which provides us with significant liquidity and financial flexibility."
(24 July 2008)
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