Analysts optimistic about Brunswick’s long-term future

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Analysts say Brunswick Corp.’s fourth-quarter results were not surprising, with RBC Capital Markets noting that the company’s liquidity position “leaves us optimistic from a long-term perspective.”

Thursday, Brunswick reported a 50 percent drop in marine sales for the fourth quarter of 2008, and a 42 percent decline in total sales for the period.

Total sales for the fourth quarter were $837.7 million, Brunswick said, versus approximately $1.4 billion in the same sales period of 2007.

For the fourth quarter, Brunswick reported a net loss of $66.3 million, or 75 cents per diluted share, compared to net earnings of $12.1 million, or 14 cents per diluted share, for the fourth quarter of 2007.

The boat segment reported fourth quarter net sales of $293.7 million, down 54 percent, compared to $645.2 million in the fourth quarter 2007. The marine engine segment reported net sales of $297.5 million in the fourth quarter, down 46 percent from $548.6 million in the year-ago period.

“Operationally our outlook for 2009 has not materially changed,” wrote Edward Aaron, of RBC Capital Markets. “However we are now forecasting a wider loss ($3.10 vs. $1.59 previously) to reflect higher pension expense … and a lack of income tax benefit.”

Aaron adds that he’s positive on the long-term outlook for Brunswick.

“We think the stock will become timely once the industry’s supply problem is fixed,” he said. “We’re clearly not there yet, but we think it’s a matter of quarters, not years, from here.”

Tim Conder, of Wachovia Capital Markets, said Wachovia believes its 2009 earnings per share estimate of $1.59 is “reasonable/slightly conservative, as [Brunswick] will now have additional restructuring charges for January ’09 plant closures vs. our original estimates.”

Boat sales, he said, could be “modestly better” than current assumptions.

“Management’s comments that they only plan to pursue sale leasebacks if it makes financial sense, as there is no need to do this for cash, was encouraging, along with the likelihood that once retail demand stabilizes, [Brunswick] will have to ramp up production at a 50-percent-plus rate, given ’09 production plans,” Conder wrote.

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