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MIAMI: Brunswick buoyed by signs of a recovery

Executives at Brunswick Corp. remain convinced that demand for new boats bottomed in 2010 and that the company has taken the steps necessary to capitalize on what they foresee as a recovery.

"We're not saying the market is going to take off in 2011," Dustan McCoy, Brunswick chairman and chief executive, said during a presentation for the financial community Thursday at the Miami International Boat Show.

However, McCoy said Brunswick remains comfortable being in the marine business and believes it can be profitable even if the new-boat market remains smaller than it once was after the industry recovers from the recession. He estimated that 132,000 new boats were sold last year in the United States.

"Boaters have continued to boat during [the recession] ... and we think they'll continue to do so," he said.

McCoy said GDP growth of 3 percent, which is consistent with current forecasts, historically has been sufficient to support an increase in boat sales.

Between 2008 and 2010, McCoy said, Brunswick prepared for the industry to recover, taking steps that included maintaining liquidity and financial flexibility, supporting its dealer network, divesting itself of non-core brands and cutting costs by closing plants. The company reduced its brands from 24 to 16.

"We said we're going to create value while going through a difficult time," he said.

Going forward, McCoy said, Brunswick wants to demonstrate outstanding operating leverage and outperform the industry.

"We've done all this work for a reason and now's the time to take advantage of the work we've done," he said.

Andrew Graves, president of the Brunswick Boat Group, emphasized that the company believes the industry's downturn is cyclical and he offered anecdotal evidence that an upturn is on the way.

He cited increases in visits and calls to dealer showrooms, conversations that show consumers are more interested in buying boats, and a series of boat shows that have been "stronger and more active than those of last year."

Graves said being the world's largest boatbuilder gives Brunswick a "unique advantage in the marketplace."

"We think we can respond to a market recovery more quickly" than our competitors, he added.

Graves also touted the company's network of dealers. "We have, by far, the strongest dealer body in the industry, and it has gotten stronger in the downturn," he said.

Graves said the company also has been reaching out to build lasting relationships with consumers.

"We're working on building more loyalty and consumer affinity for our brands," he said.

Graves cited the Sea Ray Owners Club, which he said has more than 175,000 members; Sea Ray Living, a quarterly print publication with a circulation of 100,000; and the Passages newsletter, an electronic quarterly that also reaches more than 100,000 subscribers.

— Jack Atzinger

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