Brunswick Corporation reports 42% fall in sales in Q4 2008

Brunswick Corporation today announced:-

Total sales for the fourth quarter of $837.7 million were down 42 percent versus a year ago, primarily the result of marine sales that had dropped 50 percent, as weakness in the global marine marketplace accelerated during the quarter.
A net loss from continuing operations of $66.3 million, or $0.75 per diluted share, for the fourth quarter of 2008, which includes $0.34 per diluted share of restructuring charges, $0.59 per diluted share of non- cash tax charges and a benefit of $0.56 per diluted share from the reversal of variable compensation accruals.

The continued decline in global recreational marine markets experienced throughout the first nine months of the year increased during the fourth quarter of 2008, driven by the accelerating decline in global economic conditions. We also began to see the weakening global economy affect our Fitness and Bowling & Billiards segments in the quarter," said Brunswick's Chairman and Chief Executive Officer Dustan E. McCoy.

Brunswick own many leading brands incuding Arvor, Bayliner, Boston Whaler, Cabo Yachts, Maxum, Quicksilver, Sea Ray and Sealine as well as the Mercury marine engine business.

Boat Segment

The Brunswick Boat Group comprises the Boat segment and includes 17 boat brands, as well as a marine parts and accessories business. The Boat segment reported net sales for the fourth quarter of 2008 of $293.7 million, down 54 percent compared with $645.2 million in the fourth quarter of 2007. International sales, which represented 57 percent of total segment sales in the quarter, increased by 6 percent during the period. For the fourth quarter of 2008, the Boat segment reported an operating loss of $63.9 million, including restructuring charges of $40.6 million. This compares with an operating loss of $29.9 million, including restructuring charges of $6.0 million in the fourth quarter of 2007.

For 2008, Boat segment sales were down approximately 25 percent to $2,011.9 million from $2,690.9 million in 2007. International sales, which represented 38 percent of total segment sales in 2008, increased by 13 percent on a year-to-year basis. For the year, the Boat segment reported an operating loss of $653.7 million for 2008, including goodwill and trade name impairment charges of $483.7 million and restructuring charges of $101.7 million. This compares with an operating loss of $81.4 million for 2007, including $66.4 million of trade name impairment charges and $15.9 million in restructuring charges.

"In 2008, we continued to take a number of significant steps to both address the deepening drop in demand in global marine markets, as well as position our boat businesses to move forward aggressively when markets stabilize," McCoy explained. "We reduced production, brands, models, the manufacturing footprint, employees, functions, non-manufacturing facilities and other costs, while taking steps to improve productivity and effectiveness by such actions as moving multiple brands into single production facilities."

Marine Engine Segment

The Marine Engine segment, consisting of the Mercury Marine Group, reported net sales of $297.5 million in the fourth quarter of 2008, down 46 percent from $548.6 million in the year-ago fourth quarter. International sales, which represented 55 percent of total segment sales in the quarter, declined by 42 percent on a year-to-year basis. For the fourth quarter, the Marine Engine segment reported an operating loss of $8.4 million, which benefited from a $2.0 million gain related to restructuring activities. This compares with operating earnings of $21.2 million in the year-ago quarter.

For the full year, Marine Engine segment net sales were down 17 percent to $1,955.9 million from $2,357.5 million. International sales, which represented 53 percent of total segment sales in 2008, declined by 8 percent on a year-to- year basis. Operating earnings for the full year in 2008 were $68.3 million versus $183.7 million in 2007. In 2008, the segment recorded $4.5 million of trade name impairments and $29.4 million of restructuring charges, compared with $3.4 million of restructuring charges during the same period in 2007.

For the quarter, sales were off across all Marine Engine operations, including a double-digit, year-over-year drop in markets outside the United States, reflecting the breadth and rapid decline in the global marine marketplace. In the United States, declines in outboard and sterndrive sales tracked those of boat results, reflecting the difficult market conditions in the final three months of 2008.

Consistent with actions taken in the Boat Group, Mercury also cut production rates and instituted plant furloughs during the quarter to address pipeline levels. Reduced fixed-cost absorption on lower sales had an adverse effect on operating earnings.

Date Added - 29-Jan-2009


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