Brunswick expects gain in market share - Trade Only Today

Brunswick expects gain in market share

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Brunswick CEO Dustan McCoy Tuesday reiterated his belief that the U.S. retail marine market will be flat in 2011, although his company will experience revenue and earnings growth because of market-share gains and volume leverage.

McCoy made the remarks at the Wells Fargo Securities Consumer, Gaming and Lodging Conference in Las Vegas.

For the year to date, the retail market is down about 2 percent and likely negatively affected by unfavorable weather, senior analyst Tim Conder said in a report after McCoy’s presentation.

“[Brunswick] continues to gain market share across engine, boat and fitness segments and expects further gains throughout ’11,” Conder wrote. “Engine share gains likely to continue on (1) Volvo's exit/less focus on sterndrives and (2) outboard gains stemming from Japanese supplier disruptions more significantly impacting Japanese competitors (i.e., Yamaha, Honda and Suzuki). We believe boat share gains are likely to continue, and management expects ’10 share losses to be replaced in ’11.”

Brunswick is benefiting from strong aluminum and pontoon boat demand, historically the first indicator of a recovering boat industry, Conder noted. Management said 90 percent of boat brands are profitable today and the remaining 10 percent are on a path to being profitable or reassessed, he said.

“We believe investors continue to overlook the fact that non-current new- and used-boat inventories are largely exhausted, which should precipitate a recovery in new-unit sales, even if total industry unit sales (new/used) are flat,” Conder wrote. “Bottom line: We would use recent weakness as an opportunity to continue building positions in [Brunswick] shares and feel comfortable with our estimates.”

Brunswick’s stock opened at $20.19 a share Wednesday. Its 52-week high and low are $27.70 and $11.72.

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