The industry’s global leader posted a solid performance for the first half of 2019, but a slowdown in wholesale shipments reflects concerns about weaker market conditions for the remainder of the year


  • Sales growth in 2019 has been below expectations
  • Challenging demand in first half was largely attributed to poor weather
  • US unit sales are down an estimated 7% in the main powerboat segments (YTD)
  • Solid earnings and margin growth for the period was due primarily to the Power Products acquisition and strength of premium boat categories
  • Headwinds expected for the remainder of the year for sales of value boats and engines as well as international sales
  • Wholesale shipments were down 7% year-to-date and will be further reduced in H2 to reduce pipeline inventory
  • Brunswick’s boat pipeline numbered 22,800 unit at the end of Q2 (equivalent to 32 weeks of inventory on hand; up 6% from the same quarter a year ago)
  • Acquisition of Freedom Boat completed including operation of 2,500 boats in over 200 locations (20 are company-owned)
  • Sale of the fitness business completed, putting the company on a pure-play marine path with resultant cost savings and efficiencies
  • Proceeds from fitness business are being deployed for debt reduction, share repurchases and future acquisitions
  • 10th consecutive year of EPS growth (earnings per share)

US-based Brunswick Corporation reported second quarter and half year results today, posting a 6% increase in year-to-date net sales (adjusted for the disposition of the yacht sector) up to $4.21 billion.  Second quarter net sales also saw 6% growth (adjusted) to $1.16 billion.  However, performance shows a mixed picture across segments where the company confirmed a challenging first half, due in large part to poor weather across most regions of the US and Canada resulting in lower demand for value-priced boats and engines.

“After considering first-half market performance,
we now anticipate US marine industry retail unit demand for the year
being down mid-single digit percent versus 2018.”

Brunswick CEO David Foulkes

For the first six months of the year, international sales overall were up 2% with the Engine & Boat businesses contributing equally to growth, except in Europe.  Notably, international boat sales which represented 26% of total revenues were down 17% for the second quarter due primarily to a supply disruption with contract manufacturing in Europe.  ”Because boats are typically shipped in Europe without engines which are then installed by the dealer, explained Brunswick’s CEO David Foulkes in a webcast with investors this afternoon, ”the slowdown in boat shipments did not affect engine sales in the region over the same period. 

2019 Revenue Trends by Region (YTD)
RegionEnginesBoatsTotalMix (2018)
US -2% 4% 1% 71%
Europe 11% -11% 5% 11%
Canada 5% -5% -1% 7%
Asia-Pacific 13% -4% 10% 7%
Rest-of-World    6% 16% 8% 4%
Total 1% 1% 2% 100%

Across the business as a whole, Parts & Accessories drove most of the growth with net sales up 14%, while engine net sales were down 5% in the quarter. Sales of Brunswick’s marine engines and accessories in its second quarter were up 4.5% at $871.5 million due in large due to the 2018 acquisition of Power Products. Demand for engines larger than 150 hp also helped offset softness in the smaller horsepower motors. The segment reported earnings of $164.6 million compared to $149.1 in the second quarter of 2018.

Boat sales were down 2% for the quarter to $367.3m and up 1% year-to-date.  Brunswick’s boat segment reported net sales of $366.6 for the quarter down 7.2% compared to the same period in 2018, which included $19.9 million of Sport yacht and Yacht Sales (now discontinued).

At the outset of the call, Foulkes noted, “The demand environment in the first-half of 2019 was challenging in certain of our businesses.”  Data presented showed retail sales in the main powerboat segments 7% down nationally in the US for the first half of the year. 

US Industy Retail Unit Sales (2019)
CategoryYTD change
Outboard boats -6%
Fiberglass boats (SD/IB) -12%
Main powerboat segments -7%
Outboard Engines 1%

Foulkes also reported that Brunswick’s pipeline boat inventory was up to 6% to 22,800 units (compared to the same period in 2018) and the company would be working to reduce those levels by the end of the year.  As a result, the company said operating margins were influenced by lower volume and higher retail discounts for dealers to help reduce piplines.

“After considering first-half market performance, we now anticipate US marine industry retail unit demand for the year being down mid-single digit percent versus 2018, resulting in slight overall revenue growth versus prior year, with Power Products adding 4% of growth to consolidated sales comparisons. Marine Engine sales are expected to grow between 2 to 4% and Boat Group sales are expected to decline by between 6 and 7%.  We believe that international regions will provide growth in the marine engine segment, while boat sales will continue to experience a headwind.”

“Despite near-term market challenges,
our longer-term outlook remains very positive
and consistent with our established strategic plan.”

”With steady investments in new products and technology, we continue to gain market share in our premium product categories, emphasied Foulkes.”  In answering specific questions, he highlighted the postive impact of significant new introductions of Boston Whaler models at the forthcoming Ft. Lauderdale boat show, as well as new engine production capacity for larger moters coming online later this year rectifying supple bottlenecks and boosting earnings in 2020.

Calling the company’s Parts and Accessories business a ”formidable aftermarket-focused asset that provides stable top-line earnings performance in all market conditions,” Foulkes was also extremely positive about the potential for the acquisiton of Freedom Boat Club making the company a leader in the emerging boat share market. He also pointed out that the installed fleet of 2,500 boats offers substantial opportunities for re-fitting with Brunswick motors and equipment, and very attractive financing options for boat replacements by Freedom Boat franchisees.

In his concluding remarks, Foulkes’ said, “After poor weather in the first half affecting sales, the next 90 days will be critical at retail in predicting final year-end results, but don’t expect expect much change in our forecast.”