Brunswick Corp. saw a softening in its aluminum boat segment, primarily due to continued economic and currency uncertainty in the United States, but did experience some gains in engine sales in Europe in the first quarter as the dollar weakened some.
“Canada has been a little softer, and dealers [are] being a little more reserved or delayed, as they’re looking for more stability, both in terms of currency and the economy,” CEO Mark Schwabero told investors and analysts during a conference call on Thursday to discuss first-quarter earnings. “That has been a headwind on the wholesale side” of the aluminum business.
There was slight improvement in Ontario, which accounts for about 40 percent of the Canadian market, he said.
“There was a bit of an uptick in the Ontario market, and we remain cautiously optimistic that’s going to translate into higher stocking levels by Canadian dealers by that part of the country as we move into the season a little more,” Schwabero said.
Engine sales were up 20 percent to Europe, with strong contributions from the 9 percent overall increase in that segment coming from new 350- and 400-hp engines.
“There continue to be shifts in consumer preferences for outboard-powered boats — 4 stroke versus 2 stroke, and greater horsepower engines — which has created short-term challenges for our manufacturing footprint,” said CFO Bill Metzger. “These factors, along with future product introductions, have driven our decision to expand capacity to meet demand, particularly at the higher horsepower range.”
Future quarters should see the benefit of that, he said.
The company continues to grow outboard market share globally, Schwabero said, as it continues its focus on strengthening in the saltwater, commercial and repower markets. “Our plan has been to remain somewhat flat in fresh water, where we have a strong position, and grow in commercial, repower and salt,” he said.
The company reported overall net sales of $1.07 billion for the quarter that ended April 2, up from $985.7 million a year earlier, and operating earnings of $96 million. In the quarter last year Brunswick had operating earnings of $88.7 million.
In this year’s quarter the company reported a profit of $63.2 million, or 68 cents a diluted share, compared with $56.6 million, or 59 cents a share, a year earlier.
Addressing sterndrive engines, Schwabero said sales continue to be negatively affected by a consumer shift to outboard power.