Mercury blames dumping for low margins

FOND DU LAC, Wis. – Despite a 23-percent sales increase for the year in its Marine Engine segment, Brunswick Corp. is suggesting its results reflect injury as a result of dumping on the part of Japanese engine manufacturers.

Brunswick Corp.’s Marine Engine segment, consisting of the Mercury Marine Group and Brunswick New Technologies, saw sales rise 23 percent to $2,353.2 million for the year ended Dec. 31. and operating earnings jump to $243.2 million versus $171.1 million a year ago. Operating margins increased by 130 basis points for the year to 10.3 percent from 9.0 percent in 2003.

The Marine Engine segment reported sales of $584.6 million in the fourth quarter of 2004, up 23 percent from $473.4 million in the year-ago fourth quarter. Operating earnings in the fourth quarter were up 28 percent to $34.3 million versus $26.7 million, and operating margins increased to 5.9 percent compared with 5.6 percent for the same quarter in 2003, according to the company.

Brunswick New Technologies (BNT) also posted strong gains with sales reaching $202 million for the year, according to the company. It said BNT results were led by Navman and BNT Marine Electronics, which markets the Northstar brand of components.

BNT currently is broadening its product line and expanding its markets, and by the middle of this year, it will offer “a full suite of marine electronics, which we will continue to integrate and install at the factory level to improve the convenience, quality and reliability of our marine products,” the company reported.

Mercury reports strong Verado and OptiMax sales

Mercury Marine’s direct-fuel-injected OptiMax engines experienced their greatest success to date in 2004, with double-digit sales growth over 2003, including record unit sales, the company reported in a statement yesterday.

“Direct-injected engines offer some of the best features of two-stroke and four-stroke engines, making them the perfect choice for many applications,” said Patrick C. Mackey, president of Mercury Marine. “With Mercury’s leadership in eliminating the sale of non-compliant engines, our OptiMax and FourStroke technologies offer boaters a complete choice.”

OptiMax sales in 2004 grew in many markets, with major Mercury customers Tracker Marine, Triton and Genmar Holdings leading the way, Mercury stated.

Mercury said it was also bolstered by the success of its Verado four-stroke engines, introduced in 200-275 hp models at the 2004 Miami International Boat Show. Verado models of 135, 150 and 175 horsepower will be introduced at the Feb. 17-21 boat show in Miami. Boston Whaler, Genmar Holdings and Tracker Marine led the market for Verado sales in 2004, according to the engine maker.

Brunswick Corp. Chairman and Chief Executive Officer George W. Buckley recognized those accomplishments, along with Mercury’s solid overall performance, while noting lingering market pressures from unfair Japanese outboard import practices yesterday in Brunswick’s quarterly earnings announcement. Mercury Marine is a unit of Brunswick.

“Mercury . . . got a well-earned sales boost from the introduction of the Verado family of outboard engines earlier in the year,” said Buckley. “This high-horsepower, four-stroke engine is the only supercharged production outboard engine in the world. Verado has received critical acclaim, and should help to offset to some extent a continually challenging domestic outboard market, in which we believe unfair trade practices by Japanese competitors have artificially depressed prices and harmed American manufacturers, severely hampering operating margins.

“For the year, Mercury Marine benefited from strong international sales, which were up 16 percent for the year. Operating-margin improvement was registered in all units with the exception of domestic outboards, where we continue to experience significant competitive pricing pressure from Japanese imports.”

Mackey agreed, citing what he believes are the ramifications of the dumping tactics.

“Obviously, the strong sales of OptiMax and Verado engines were not enough to mitigate the continuing challenges of the marketplace,” he said. ”Mercury’s domestic outboard business continues to face many obstacles, primarily from dumping-related market pressures. Virtually every Mercury division reported strong returns in 2004, except our domestic outboard unit, where we specifically continue to experience significant competitive and unfair pricing pressure from Japanese imports.”

The U.S. International Trade Commission (ITC) is scheduled to vote Feb. 2 on whether the U.S. outboard industry was injured by Japanese engine manufacturers’ dumping practices. If the ITC members vote in favor of injury, a 19-percent duty will be imposed on all outboards imported to the United States from Japan, reported Mercury.

  • For more of the latest news, click here.

Leave a Reply

Your email address will not be published. Required fields are marked *