A 50 percent drop in marine sales for the fourth quarter of 2008 contributed to Brunswick Corp.’s 42 percent decline in total sales for the period, the company reported today.
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.
Late this morning, Brunswick was trading at $2.95 per share, down from an opening price of $3.22. Its 52-week high and low are $19.63 and $1.82.
“The continued decline in global recreational marine markets experienced throughout the first nine months of the year increased during the fourth quarter of 2008, driven by the accelerating decline in global economic conditions,” Brunswick chairman and CEO Dustan E. McCoy said. “We also began to see the weakening global economy affect our Fitness and Bowling and Billiards segments in the quarter.”
In this economic climate, Brunswick is focused on maintaining strong liquidity without increasing debt, maintaining the health of its dealer network, and positioning the business to emerge from the economic crisis stronger than before, McCoy said.
“During 2008 we reduced the dealer pipeline by 6,700 units — a 22 percent reduction — and ended the year with 34.5 weeks of product in the pipeline on a trailing 12 months retail basis, compared with 34 weeks at the end of 2007,” McCoy said.
“Our weeks-on-hand and the decline in the absolute number of boats in the pipeline are remarkable in the current retail environment, but burdened our earnings as we exited 2008 with the percentage decline in our fiberglass boat manufacturing volumes more than double the percentage of decline we saw in retail demand,” he added.
The boat segment, which includes 17 brands as well as a marine parts and accessories business, reported net sales for the fourth quarter of $293.7 million, down 54 percent compared to $645.2 million in the fourth quarter of 2007. International sales, which represented 57 percent of total segment sales in the quarter, increased by 6 percent during the period.
The marine engine segment, consisting of the Mercury Marine Group, reported net sales of $297.5 million in the fourth quarter, down 46 percent from $548.6 million in the year-ago period. International sales, which represented 55 percent of total segment sales in the quarter, declined by 42 percent on a year-to-year basis.
In a conference call with analysts this morning, McCoy noted the company reduced costs by $160 million in 2008, and reduced the overall company work force by 27 percent. In marine and corporate operations, there was a 40 percent reduction in the work force, he said, and that figure is expected to rise to about 46 percent this year.
In 2008, eight marine plants were closed and another three mothballed, McCoy said.
While he called these reductions “painful and disruptive,” McCoy also noted that once the market improves, the remaining plants will be able to increase production to meet need.
For the year ending Dec. 31, 2008, the company had net sales of $4.7 billion, compared to $5.67 billion in 2007. For 2008, the company had a net loss of $788.1 million, or $8.93 per diluted share.
For 2008, boat segment sales were down approximately 25 percent to around $2 billion, from approximately $2.7 billion in 2007. International sales, which represented 38 percent of total segment sales in 2008, increased by 13 percent on a year-to-year basis.
"In 2008, we continued to take a number of significant steps to both address the deepening drop in demand in global marine markets, as well as position our boat businesses to move forward aggressively when markets stabilize," McCoy said. "We reduced production, brands, models, the manufacturing footprint, employees, functions, non-manufacturing facilities, and other costs while taking steps to improve productivity and effectiveness by such actions as moving multiple brands into single production facilities."
For the full year, marine engine segment net sales were down 17 percent to nearly $2 billion from $2.35 billion. International sales, which represented 53 percent of total segment sales in 2008, declined by 8 percent on a year-to- year basis.
"As we had anticipated, 2008 proved to be a very challenging year for our businesses, and we expect 2009 to also be difficult. We will continue to focus on maintaining our strong liquidity, taking actions necessary to maintain dealer health, and positioning ourselves to exit this global downturn as a better business," McCoy said.
"Although we have limited visibility to a very volatile marketplace entering the year, we expect our revenues to be lower in 2009, with higher relative percentage declines occurring in the first half of the year,” he added. “Our expectation of lower revenues reflects our view that retail demand will continue to decline at least through the first six months of the year, and we are planning for production at rates well below the retail rate of decline.”
— Beth Rosenberg