Skip to main content

Survey shows demand for boats is still soft

A recent survey of boat dealers in the second quarter confirms “well-documented industry weakness,” according to a recent report from RBC Capital Markets.

“Demand for new boats is extremely poor,” said Ed Aaron, RBC’s director of equity research, in the report.

Nearly 35 percent of dealers reported that new boat sales are declining by 30 percent or more, supporting RBC’s view that the market was down 25 to 30 percent in the second quarter. The used market is holding up much better in relative terms, according to the investment firm.

“Dealers attribute energy and consumer confidence issues as the primary reasons for the weakness, but also expressed concern over the financing environment,” said Aaron.

Inventory is still a problem, he continued. Dealers expressed concern with the overall level and, to a greater extent, the aging of their inventory. Aaron said dealers did not indicate a significant amount of promotional assistance from manufacturers, supporting RBC’s view that Brunswick and other manufacturers are adjusting primarily through production.

Also, most dealers are cautious in the short term and are planning to react by significantly reducing orders, lowering prices and cutting expenses. Dealers are uncertain whether the market will recover next spring.

Over the longer term, sentiment towards the business varied widely, according to Aaron. Some dealers believe the current downturn is temporary, whereas others fear the market could be permanently impaired for structural reasons, most notably the prohibitive cost of owning and operating a boat.

As for Brunswick Corp. and MarineMax, the two publicly traded marine companies that RBC follows, the investment firm expressed confidence in the liquidity of both companies.

RBC analysts said they were encouraged by Brunswick’s recently announced restructuring plan, which the analysts said should ensure solid profitability by 2010 without assuming an industry recovery. They also said they were not concerned with the subsequent debt rating downgrades, given the company’s “solid liquidity position and consistently positive free cash flow generation.”

On MarineMax, RBC analysts said, “While we expect MarineMax to report very weak numbers — possibly including impairment charges — and potentially violate a debt covenant, we see a very low probability of serious liquidity risk. Even with a poor earnings release, clarification of this issue could bring some short-term relief to the stock.”

Related

CRUISERS

Industry Mourns Cruisers Yachts Owner

K.C. Stock, who was 84, was known for his “commitment to the employees at Cruisers Yachts.”

GRANDBANKS

Grand Banks Purchases Florida Property

The parcel, which is opposite the company’s Stuart yard, has berths for up to nine boats and will increase service capabilities.

LIMESTONE-Q3

Limestone Boat Co. Posts Q3 Results

Unit production was down compared with the second quarter, and revenues decreased 33%.

SIREN-YAMAHA

Yamaha Dealers Now Carry Siren Systems

Siren Marine’s “Connected Boat” technology can be purchased and installed at more than 2,100 Yamaha outboard dealers.

Northpoint

Northpoint Expands Marine Presence

Northpoint Commercial Finance has partnered with Elite Recreational Finance to offer retail financing.

BRP

BRP Reports 71% Increase in Q3 Revenues

The Sea-Doo manufacturer had total revenue of $2.7 billion, but North American marine retail sales were down 47%.

Airmar

Airmar Announces Training Dates

Certified Installer and SmartBoat system classes are being held this month in New Jersey and next year in New Hampshire.

Norm

The Survey Says …

Surveying customers to find out what they think about your business has never been more important.

1_MDI

Marine Development Inc. Changes Hands

Mick Webber, the former president/CEO and owner of HydroHoist, has purchased the company from its founders.