Brunswick outlines 2008 expectations

NEW YORK – When marine industry giant Brunswick Corp. (NYSE: BC) met with analysts, including Bank of America’s Michael Savner, earlier this week, it didn’t have a lot of good news for those hoping for a rebound in boating business in 2008.

In fact, the company told analysts it expects 2008 marine industry retail units to decline in the high single to low double digits. That’s following this year – one in which industry unit volumes are expected to be at a historic low.

Current expectation is of 262,000 units, much lower than the last industry trough of 277,000 units in 1991 and 299,000 in 1982, Bank of America reported in a statement on Wednesday.

“Specifically, the outboard industry sales in 14 of the top 20 states have declined 15 to 33 percent from it 2004 peak level. This is a significant decline given top 20 states constitute roughly 80 percent of the retail market,” Bank of America stated. “For sterndrive, sales fell from 2005 peak in 16 of top 20 states, and the decline range between 3 to 31 percent.”

Bank of America also said Brunswick suggested that preliminary data leads the company to believe fourth quarter retail sales will likely be down double digits, especially Florida and California.

“In the Mid-West the company reported the market for aluminum boats above 16 feet is down 43 percent compared to 2004. Similarly salt water fishing boat market is down 18 percent in the U.S. as compared to 2004,” reported Bank of America. “We believe if the domestic retail environment does not improve Brunswick will be forced to make further production cuts, well beyond its current reductions until 1H08.”

The meeting with analysts wasn’t all doom and gloom, however. Brunswick told analysts that it would focus on cost cutting and inventory reduction in 2008 as a top priority. While it suggested there would be reductions in its investment in some of its smaller boat brands, investments would increase in its big boat business, Brunswick suggested.

Finally, Brunswick said its international marine business was flourishing, and it expects international revenue to grow from the 36 percent to 50 percent of total revenues. Brunswick’s other two industries – life fitness and bowling are also expected to grow.

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