Brunswick Corp. expects growth of 7 to 9 percent between 2016 and 2018 and anticipates that the gain will come from continued industry growth, investment in new products and investments in additional acquisitions around its marine parts and accessories business, as well as its fitness business.
That was part of the three-year plan Brunswick CEO Mark Schwabero outlined during a meeting with investors Tuesday at the Jefferies 2016 Investor Conference in Nantucket, Mass.
The company expects to see between 3 and 5 percent of the growth coming from industry growth (if the nation’s gross domestic product is at projected rates of about 3 percent), about 2 percent of it coming from being “product leaders” and another 2 percent coming from additional growth from acquisitions, Schwabero said.
“We still believe there are lots of opportunities in the parts business and the fitness business,” Schwabero said.
At 7 percent revenue growth, the company would be on track for revenue to be in the low-to-mid $5 billion range by 2018, he said. Revenue in 2015 was $4.1 billion. Operating margins are expected to rise to 12 to 12.5 percent in 2018.
An expected $200 million to $300 million of free cash flow will help as the company continues to invest in its Mercury engine business and parts and accessories companies, Schwabero said.
The company’s P&A business is expected to generate about $1.5 billion in 2018, he said.
Operating margins in 86 percent of Brunswick’s portfolio exceed those of pre-recession levels, Schwabero said.
“Europe’s doing better than we thought it might this year,” he said when asked about the global economy. “Obviously it varies by country.”
Australia is flat, and Brazil remains the most challenged of the emerging markets, Schwabero said.
Canada is seeing an uptick in retail activity, he said, although that has not pulled through to the wholesale side yet.
“The good news is that … places like Ontario are doing OK,” Schwabero said. “Real estate prices are doing well, so we’re seeing a bit of an uptick there.”