Brunswick Corp. announced that consolidated net sales increased 7 percent in the first quarter, with the marine engine segment up 9 percent and the boat segment rising 7 percent over last year.
For the first quarter of 2018, Brunswick reported net earnings of $80.5 million, or $0.91 per diluted share, compared with net earnings of $74.2 million, or $0.81 per diluted share, for the first quarter of 2017.
"Our marine businesses continue to benefit from strong demand for outboard boats and engines, successful new products, and our strategy to grow the parts and accessories businesses,” said Brunswick CEO Mark Schwabero in a statement. “As a result, our marine businesses had revenue growth of 8 percent in the quarter, with a very strong increase in operating earnings versus first quarter 2017.”
Unfavorable weather in the Northeast, Midwest, and in Europe contributed to a slightly lower start to boating activity and the marine retail selling season, Schwabero said.
Brunswick raised its 2018 expectations at the bottom end, and now expects revenue to grow between 6 and 7 percent, but issued the caveat that trade policy could affect the company.
"Our plan assumes that inflation factors are mostly offset by price; however, the impact of trade policy changes could possibly create some additional pressure moving forward, which our businesses would address accordingly,” Schwabero said.
The marine engine segment reported net sales of $687.1 million in the first quarter, up 9 percent from $631.8 million in the first quarter of 2017.
International sales, which represented 31 percent of total segment sales in the quarter, were up 10 percent compared to the prior year period. For the quarter, the marine engine segment reported operating earnings of $95.7 million, compared to operating earnings of $87.7 million last year.
Sales increases in the quarter were driven by strong growth in propulsion, led by increases in outboard engines, and solid growth in the parts and accessories businesses, according to the company.
The increase in operating earnings in the first quarter was primarily due to benefits from higher net sales and favorable movements in foreign exchange rates, which were partially offset by the unfavorable impact from planned spending increases stemming from new product introductions, capacity expansion, and product development.
"We continue to focus on product leadership as evidenced by Mercury’s launch of the 175- to 225-horsepower V6 outboard engines, the first in a series of major outboard engine launches planned for 2018,” said Schwabero, adding that those engines will start shipping in the second quarter.
The boat segment reported net sales of $304 million, up from $284.9 million in the first quarter of 2017, and operating earnings of $24.7, up from operating earnings of $16.2 million in the same period last year.
International sales, which represented 28 percent of total segment sales in the quarter, increased by 14 percent compared to the prior year period.
The segment's revenue reflected strong growth in the fiberglass freshwater boat businesses, comprised of Bayliner brand along with European brands Quicksilver and Uttern.
It was also the result of solid growth in the aluminum freshwater boat businesses.
Revenue for the fiberglass saltwater boat business was comparable to a strong first quarter of 2017. The increase in segment operating earnings was primarily the result of higher net sales and timing benefits resulting from implementation of a new revenue recognition standard.
Operations of Sea Ray, which the Brunswick said it wanted to sell in December, were not included in the financial results.
"We expect our marine businesses' top-line performance to benefit from the continuation of solid global market growth, along with the success of new products,” said Schwabero.