Marine Products reports lower sales

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Marine Products Corp., the Atlanta-based manufacturer of Chaparral pleasure boats and Robalo sportfishing boats, today reported double-digit declines in sales and income for the second quarter ending June 30.

"Our financial results for the second quarter of 2008 reflect the recent acceleration of the decline in the recreational boating market which we have experienced for almost three years,” CEO Richard A. Hubbell said in a statement.

For the quarter ended June 30, net sales fell 17.9 percent to $55.7 million, compared to $67.9 million last year. The decrease was due to a 24.8 percent decline in the number of boats sold, partially offset by a 6.8 percent increase in the average selling price per boat.

Net income for the recent quarter dropped 26.1 percent to $3.9 million, from $5.3 million in the prior year. The decrease was due to lower income before income taxes, partially offset by a lower effective tax rate. Earnings per share for the quarter was 11 cents, a 21.4 percent decline compared to 14 cents earnings per share in the prior year.

“During the spring selling season, the price of fuel increased dramatically, which we believe caused many consumers to forego the purchase of a new boat,” Hubbell explained. “Also, the declines in the residential housing market have continued, and are acute in important recreational boating markets. These factors, along with slower economic growth, have made the 2008 retail selling season very weak.”

He noted that the boatbuilder’s order backlog is lower than at this time last year, and its dealer inventories are higher.

Net sales for the six months ending June 30 declined 8.7 percent to $121.3 million. Net income for the six-month period decreased 12.7 percent to $8.03 million, or 22 cents earnings per share, compared to $9.2 million or 24 cents earnings per share in the prior year.

Because of continued high fuel prices and other factors such as the general economy and prolonged drought in several important markets, Marine Products has made further cuts in unit production and direct costs as it begins 2009 model-year production.

“Although we are cutting costs to manage our profitability at current production levels, we continue to develop new products and increase brand awareness among our consumers, which will benefit our company in the long run,” Hubbell continued. “We find evidence of this in the available retail unit sales data through May, which indicate that Chaparral's market share has improved slightly, and that our unit sales have declined less than the general market for our category of recreational boat.”

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