|
|
Member
Posts: 2393
Location: Waukesha Wisconsin | Brunswick profits soar on boat, engine sales
Brunswick Corp. nearly doubled its net earnings for the first quarter of 2005, due mainly to the strength of its engine and boat segments.
“Once again our marine operating units led the way with combined engine and boat sales up 21 percent during the period,” said George W. Buckley, chairman and CEO, in a statement. “The sales gain was driven by strong dealer response to new product introductions as well as continued strength in international markets.”
Buckley expects sales to remain strong through the rest of 2005.
“We continue to believe that marine retail will be up in the mid-single digits this year,” he said today in a conference call with financial analysts.
Net earnings for the first quarter ended March 31 totaled $94.6 million, or 96 cents per share, compared to $48 million, or 50 cents per share, for the year-ago quarter. Net sales increased 17 percent to $1.4 billion, up from $1.2 billion a year earlier.
During the first quarter of 2005 the company completed the sale of about 1.9 million shares of MarineMax Inc. stock, resulting in a pre-tax gain of $38.7 million, or 32 cents per share. Buckley also noted that acquisitions played a role in Brunswick’s 17 percent sales increase. Excluding those business units, sales rose 10 percent.
The marine engine segment, consisting of the Mercury Marine Group and
Brunswick New Technologies, reported sales of $605.6 million in the quarter — up 15 percent from $527.9 million in the year-ago period. Operating earnings in the first quarter advanced 22 percent to $52 million, compared with $42.6 million last year.
“We continue to see strong demand for our new products, which is driving sales growth in the segment,” said Buckley. “During the first quarter we extended our Verado family of supercharged 4-stroke outboard engines with the launch of the 135-, 150- and 175-horsepower models.”
Also, Mercury opened a new 174,000-square-foot production facility in China in the 2005 first quarter to produce 4-stroke engines from 40-hp to 60-hp. The company opened a new 275,000-square-foot facility in Japan with its joint venture partner Tohatsu to make 2.5- to 30-hp 4-strokes. As the year continues, Brunswick expects the plants will ramp up volume and, in turn, increase the company’s cost competitiveness in these market segments.
“BNT, particularly our Navman unit, also contributed to segment sales growth in the quarter,” Buckley added. “We are beginning to see the results of Navman’s accelerated research and development investments as well as its increasing presence in markets around the world.”
The Brunswick Boat Group reported a 32-percent increase in sales to $677.5 million, compared with $512 million in the first quarter of 2004. Operating earnings increased 55 percent to $49.5 million, from $32 million.
“The success of new products contributed to the sales gain with double-digit growth reported by Sea Ray, Boston Whaler, Sealine, Princecraft and Baja,” said Buckley.
A portion of the boat segment sales gain was due to the acquisition of the Crestliner, Lowe, Lund and Sea Pro brands, which were not included in the prior-year quarter. Excluding these acquisitions, boat segment sales were up 17 percent.
Buckley did acknowledge some earlier problems with Brunswick’s new aluminum boat lines, however. He said inventories at Crestliner, Lowe and Lund were higher when Brunswick bought those companies “than we consider normal.” Crestliner, for example, had 44 weeks of supply, but Brunswick has since reduced that to 38 weeks.
Buckley said these brands also suffered from the refusal by Yamaha Marine to supply them with 4-stroke outboard engines. The Brunswick CEO said there is a shortage of 4-stroke supply all across the market, internationally, but he said the ramp-up of Mercury’s new Verado engines will rectify this situation.
Brunswick attributes the improved operating margins in the boat division to higher volumes and effective cost management. Buckley said the company is weathering increasing material costs better than its competitors because of its buying power.
“We believe we’ve been able to buy resins cheaper than anyone else in the marine industry,” he said during today’s conference call.
He said Brunswick has seen its resin costs increase a total of 19 percent over the last 10 years. This year, he expects a less-than-1-percent net increase in material purchasing costs.
Buckley also said he sees no significant increase in labor costs in the coming year. In fact, he said, there will be some reductions as the company moves some of its production overseas to lower cost areas.
Brunswick during the first quarter added the Albemarle brand to extend its offering of offshore sportfishing boats, which, along with Hatteras, now range from 24 to 90 feet.
“On the smaller-boat side, we continue to see strong demand for our Bayliner 175 and Bayliner 185 entry-level runabouts,” Buckley continued. “During the quarter, we opened a second boat plant in Mexico, which doubled our capacity to produce these and other popular models in this family.”
Looking ahead, Buckley said he continues to be “very encouraged” by the trends in the marine market, especially as the industry enters the spring selling season.
“Our marine pipeline inventories are at 31 weeks of supply for boats and 29 weeks of supply for engines, up three weeks and five weeks, respectively, from a year ago, representing a return to more normal levels,” he said.
While the Conference Board today reported a drop in its Consumer Confidence Index, and other recreation industries are seeing sales decline, Buckley is optimistic for the marine industry in general and for Brunswick in particular.
He said consumer confidence levels are the same as they were in 1994, when Brunswick saw record level sales gains. Furthermore, he said, retail sales in the marine market were up in March and early April — unlike motorcycles and all-terrain vehicles.
And, he added, “We’re gaining a lot of market share.”
“While always being cognizant of the influence of underlying economic and stock market conditions, we remain on track for another very good year,” he said.
Brunswick is raising its estimate for the year by 5 cents to $3.52 to $3.67 per share, which includes the 32 cents per share gain on the MarineMax stock sale. This compares with $2.77 per share for 2004. For the second quarter, the company expects earnings in the range of $1.08 to $1.13 per share, compared with 93 cents per share for the year-ago second quarter.
The company said its new estimate assumes sales growth for the year of between 12 percent and 13 percent. This represents a 1-percent increase in the rate of sales growth over the company’s previous estimate.
| |
| | |
Member
Posts: 714
| Those profits are going to grow even more once the next issue of "Bass & Walleye Boat" magazine comes out. They did an on water comparison-shoot out, between the Merc's and the Etec's. From what I've heard, with the 250's, it wasn't even close, Merc walked away with it!!
If it ain't black, move to the back of the pack!! | |
| | |
Member
Posts: 363
Location: Kaukauna WI | The Merc product is great but lest look at another point in last quaters the had tons of develoment cost to bury so profits droped of a bit also. Just my 2 cents worth. | |
| | |
| http://www.e-tecinfonet.org/sitebuildercontent/sitebuilderfiles/pe3...
I dont know about the B&W boats test, but here you can see that the 225 HO e-tec is faster, has better acceleration, and uses less gas at full throttle than the 250 verado. | |
| | |
Member
Posts: 714
| I would have to guess that B&W magazine would be a bit more impartial than a E-TEC web site!!  | |
| | |
| Look at tha web site agian, it states the data IS from Bass and Walleye magazine. | |
| | |
Member
Posts: 20
Location: Campbellsport WI | You can't compare a fourstroke to a two stroke.........for those that don't know, the E'TEC is a TWO STROKE. When the tests come out from Mercury's 225XS against the 225 ETEC's HO everyone will see the results.....Theres a pretty true rumor that the ETEC blew two gearcases during the test. | |
| | |
Member
Posts: 714
| weedbass - 4/28/2005 9:20 AM
You can't compare a fourstroke to a two stroke.........for those that don't know, the E'TEC is a TWO STROKE. When the tests come out from Mercury's 225XS against the 225 ETEC's HO everyone will see the results.....Theres a pretty true rumor that the ETEC blew two gearcases during the test.
Damn, you beat me to the punch!
As for the tests, I understand it wasn't even close! | |
| | |
Location: Rhinelander | What's a 'pretty true rumor'? Let's stick to published fact from the tests. please, and leave 'rumor' where it belongs. | |
| | |
| I think the Bass and Walleye report will confirm the gearcase rumor. The one thing I wil give Etec, there was no "Scheduled" maintenance during this test, it was all unscheduled! | |
| | |
Member
Posts: 1382
| I for one will wait for the test to find out what actually happened, if it is even mentioned at all. As someone who has actually run both engines, I will say they were both pretty impresive, and both have their strengths and weaknesses. | |
| | |
| well for the walleye guys with 25" transoms and not bass boats better check the motors first! A lot of the Merc racing motors that they test are not offered to us walleye guys. 20" shafts on racing eng. So lets see them tested apples to apples on a few walleye boats!
So 225 opti and 225 e-tec | |
| | |
Member
Posts: 1382
| The 250 XS has always been available with a 25" shaft. The 225XS with a 25" shaft will be available this summer.
You're right, the straight 225 Etec and the straight 225 Opti is the comparison everyone is waiting for. I am guessing they will be very close in most aspects of performance. | |
| | |
Member
Posts: 35
| Don't the XS motors require premium fuel as well?? | |
| | |
Member
Posts: 35
| Did anyone else find it intriguing that after trying to get the federal government to slap Yamaha on the wrist, all of Mercury's 2.5 - 60 hp motors will be produced in China and Japan? | |
| | |
Location: Rhinelander | Not really, no. The competitive pricing on the smaller motors forces outboard motor builders to move offshore if they want to offer them; it's just plain too expensive to build the smaller motors here in the US. It's a global economy. Remember, Mercury offers it's products internationally, not just here in the US.
The dumping issue wasn't presented because of the country of origin, it was offered because of what appeared to be predatory pricing practices by Yamaha. | |
| |
|
Brunswick profits soar on boat, engine sales