Brunswick Corp executives yesterday outlined the company’s three-year growth plans for 2018-2020 in a special conference at the New York Stock Exchange. Forecasts include compound annual growth rates of 6% to 8%, with revenues in the range of US$5.7-$6.0bn. EPS rates are expected to be US$5.25-$5.75 by 2020.
The executives highlighted contributors like solid revenue growth across all segments, ongoing product development strategies and widening distribution capabilities that drive market share growth, and higher horsepower engines continuing to benefit marine sales. Acquisitions in 2018 would provide incremental growth for Mercury’s P&A business, though sales would account for just 2.0% of companywide sales.
Brunswick expects 2018 to be towards “the bottom end” of its three-year growth target, with sales ranging from US$4.20 to US$4.40bn.
Chairman Mark Schwabero said Brunswick has become less cyclical since 2007 when new boats and engines accounted for 70% of total sales. By 2020, that number will be closer to 50%. “Our earnings are more heavily tied to boat usage versus new-boat demand,” said Schwabero.
The company expects global marine sales growth of 2% to 4% over the next three years, with dollar growth exceeding unit sales. Brunswick expects continued gains outside the US, with an 11% gain in international sales for 2017 compared to 2% from 2012-2016. “In 2017, international sales are growing faster than the US, with the pace of recovery exceeding our long-term outlook,” said Schwabero.
John Pfeifer, Mercury Marine president, said that his division expects to see a continued global shift from sterndrive to outboard power. High-horsepower outboards are outpacing the larger market, with average horsepower up 38% since 2010. Pfeifer said that “digitally connected boats” with vessel remote monitoring, autonomous docking and remote diagnostics will create “significant value” for the company. Mercury will continue to focus on “underserved markets” in the saltwater, commercial and repower categories. Mercury has about 25%-29% of total saltwater market share and has reported share gains since 2013. Its repower market share is in the mid-20% range.
Mercury’s P&A business, now 80% aftermarket and 20% OEM, accounts for about US$1.2bn in annual sales. The company plans to raise sales by US$350m through acquisitions by 2018.
The Brunswick Boat Group said it would continue to focus on its market leadership brand positions in the saltwater and freshwater categories. The division has seen improving financials across most of its brands, though it noted recent challenges with the decline in demand for larger boats, an exit from the Brazilian market and ongoing challenges finding hourly workers. The Boat Group will continue to focus on product development with “high-return” opportunities while also making its facilities more efficient through Lean Six Sigma techniques.
Schwabero said that its current three-year plan estimates a stable marine environment, but that its marine businesses would perform well even during a down cycle.