Brunswick reports third quarter results

BRUNSWICK Corporation reported results for the third quarter of 2009. The company reported net sales of $665.8 million, down from $1,038.8 million a year earlier.

The Marine Engine segment, consisting of the Mercury Marine Group, including the marine service, parts and accessories businesses, reported net sales of $363.5 million in the third quarter of 2009, down 29 percent from $515.2 million in the year-ago third quarter.

International sales, which represented 41 per cent of total segment sales in the quarter, declined by 27 percent. For the quarter, the Marine Engine segment reported an operating loss of $13.4 million, including restructuring charges of $18.8 million. This compares with an operating loss of $9.7 million in the year-ago quarter, which included $18.6 million of impairment and restructuring charges.

Sales were off across all Marine Engine operations, with sterndrive engines experiencing a greater sales decline than outboard engines. Sales from the segment's domestic marine service, parts and accessories businesses, which represented 35 percent of total segment sales in the quarter, were down mid-single digits, as boat usage and the purchase of parts and accessories remained relatively stable.

Mercury's manufacturing facilities continued to cut production rates and take plant furloughs during the quarter in response to lower retail demand and to reduce pipeline levels. Lower sales, reduced fixed-cost absorption on lower production and higher bad debt expense had an adverse effect on operating earnings, which were partially offset by Mercury Marine's expense reductions.

The Boat segment is comprised of the Brunswick Boat Group and includes 17 boat brands.

The Boat segment reported net sales for the third quarter of 2009 of $118.2 million, down 62 per cent compared with $314.2 million in the third quarter of 2008.

International sales, which represented 43 per cent of total segment sales in the quarter, decreased by 60 percent during the period. For the third quarter of 2009, the Boat segment reported an operating loss of $86.7 million, including restructuring charges of $6.6 million. This compares with an operating loss of $536.3 million, including impairment and restructuring charges of $491.6 million, in the third quarter of 2008.

Boat manufacturing facilities also continued to significantly cut production rates and take plant furloughs during the quarter to address inventory levels held by the company and its dealers. Lower sales, reduced fixed-cost absorption on lower production volumes and higher discounts and incentives to support retail sales by dealers had an adverse effect on operating earnings, which were partially offset by the Boat Group's expense reductions and the absence of impairment charges incurred in the third quarter of 2008.

"We continue to make great strides in improving our overall liquidity position, reducing our marine dealer pipeline and executing our cost reduction program," said Brunswick's chairman and CEO Dustan E. McCoy.

"These significant accomplishments have been achieved against a global marine market that has experienced its lowest level of demand in more than 45 years.

"As we enter 2010, the majority of our boat and engine manufacturing facilities will begin to ramp up production. This is primarily the result of dealer inventories being at historically low levels, which means we will need to increase our wholesale shipments of boats and engines to meet retail demand. Increased production combined with higher wholesale shipments should provide improved revenue and reduced losses throughout 2010," said McCoy.