Marine market a long way from recovery, analyst says

CHARLOTTE, N.C. – It’s no secret the marine market is in a tough spot and new market analysis speculates it will be a long time before the market rights itself.

Wachovia Capital Markets believes it will be 2010 at the earliest before the first real signs of an upturn in the U.S. marine industry will be evident, said Tim Condor, WCM market analyst, in a report for Brunswick Corporation stockholders.

Brunswick is likely to continue making production cuts and may discontinue some brands altogether, Wachovia says. This fits with what Brunswick Chairman and CEO Dusty McCoy told Boating Industry in a recent interview. The company is focusing on building its cash assets for $250 million it has due in July 2009 in variable rate debt, Wachovia suggested, and after achieving a comfortable cash cushion, the company will resume share repossession as it sees fit.

The Wachovia report also suggested that the company’s channel inventory is up year over year, that auctions for used, repossessed and new boats are accelerating and that the high end of the boat market, which is considered the industry’s last area of strength, is beginning to soften. They expect dealer and manufacturer “failures to accelerate” after the summer.

Strong cash generation and ongoing structural changes, including efficiencies from platform and plant consolidation, should allow Brunswick to weather the U.S. industry downturn and position the company for further gains, Wachovia concluded.

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