Brunswick CEO Sees Reduction In US Power Boat Sales

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(In the item, "=Brunswick CEO Sees Reduction In US Power Boat Sales," published at 5:30 p.m. EDT, the CEO's first name was misspelled, in the first paragraph. The correct version of the story follows).
By Bob Tita
Of DOW JONES NEWSWIRES
CHICAGO -(Dow Jones)- Sales of recreational power boats in the U.S. may decline by more than 20% this year, as consumers continue to avoid purchases of luxury items in a weak economy, Brunswick Corp. (BC) Chief Executive Dustan McCoy said Tuesday.
McCoy said power boat sales volume may fall below 150,000 units from 196,000 boats in 2008. Brunswick, the world's largest producer of recreational boats, has been aggressively paring back its production in response to the falling demand.
The Lake Forest, Ill.-based company has eliminated seven boat brands and reduced its roster of manufacturing plants to 14 from 28. The size of the company's marine workforce fell by 50% last year.
The reductions are expected to lower the company's fixed costs by $365 million this year, McCoy said.
And he said the company is prepared to throttle back its operations further to avoid a glut of unsold boats from developing at its dealers.
"We're choking off the new boats going into the pipeline, so the dealers can get rid of the old product," McCoy said during a presentation at a Raymond James institutional investor conference in Florida. "When the economy comes back both the dealer network and we will be a lot more healthy."
McCoy said the aggressive destocking comes at the expense of sales and profit growth for Brunswick as its boat plants mostly remain idle.
The company lost $788 million in 2008 as sales plunged 17% from 2007 to $4.7 billion. Brunswick also makes fitness equipment, bowling equipment and billiards tables.
Brunswick's boating business has been weighed down in recent years by soaring fuel prices and more recently by the downturn in the economy that's prompted consumers to eliminate discretionary purchases.
McCoy said Brunswick will be able to ride out the slump. He said the company is reviewing its boat brands for additional reductions and is conserving cash and avoiding debt.
When orders do return, McCoy predicted the company will be able to ramp up production quickly, even after reducing the company's manufacturing capacity.
"We think we can double production in the footprint we have today," he said.
He said the company is moving ahead with new product introductions, including a new Boston Whaler brand fishing boat.
Brunswick's stock Tuesday closed up 16.6%, or 38 cents, at $2.66.
Click to expand...

Just read this on CNN.
 
He forecasted sales going down? What a genius.
 
Amazing !!! It's insight like this that will never allow us to get into this type mess again.
I wonder if Dusty can predict if the sun will come up, and set each day ???
 
Which brands were eliminated?
 
I'm not sure, but I thought I heard something about Maxum??
 
They eliminated a magazine?
 
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I'm glad to hear that he is confident the brand will survive and that they have taken responsible measures to ensure that.
 
Dave S said:
And they also sold Baja to Fountain.
Click to expand...

More like they stuffed Baja down Reggie's throat. He owed Brunswick so much that all he could say was, "Thank you, sir. May I have another?" Or at least, that's how I heard it.

Best regards,
Frank
 
Notice that the stock rose 17% after the announcement.
Scott was able to reassure investors that he's cut his expenses significantly, and is prepared to see sales decrease 20% this year (on top of '07 and '08 declines). Yet when things turn, he's ready to double production to meet demands.

Lower production for 2007 and 2008 means that when demand goes back up, there will be a shortage of new boats and newer model used boats (i.e. '07, '08, '09 ) to meet demand. Therefore, new boat prices should go way up, and values in the used boat market should go up as well.

For those thinking they want to get a new boat in the next few years, now is the time.
 
BC stock is selling at $2.55 today. The 52 week low was $1.82 back in November. Not exactly an enthusiastic response from investors, in my opinion. So it's clear that sales will suck this year. My question is what Sea Ray will do to keep current owners / potential customers enthusiasitc about the brand? Will there be an Aquapalooza this year? How many dealerships will close?
 
999ghosts said:
... My question is what Sea Ray will do to keep current owners / potential customers enthusiasitc about the brand? Will there be an Aquapalooza this year? ....
Click to expand...

Yep already set for Lake Martin, AL.
 
Hall Marine, the dealers for SC and Savannah GA have it scheduled on the calender at each dealer.
 
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