Financial analysts lower expectations for Brunswick

NEW YORK – After Thursday's announcement that Brunswick would cut 1,400 additional jobs, several analysts have downgraded their forecasts for the company.

Standard & Poor's Ratings Services lowered Brunswick's long-term ratings to BB- from BB+, reports. The ratings were placed on CreditWatch with negative implications, meaning a further downgrade is possible. According to the financial Web site, Standard & Poor's had expected demand for recreational marine products to decline during 2008, but the decline has been accelerated by the poor state of the financial markets.

Standard & Poor's predictions for Brunswick were based on “unprecedented economic pressures on recreational marine demand caused by consumer sentiment, high fuel prices, shrinking credit availability and the effect of financial market instability in reducing non-financed sales.”

The Associated Press reports that another analyst, Edward Williams of BMO Capital Markets, has also cut his earnings and revenue forecast for Brunswick through 2009.

In 2008, Williams said he expects the Lake Forest-based manufacturer to lose $5.25 per share, including charges. His previous estimate was a loss of 87 cents per share.

“We expect the accelerated restructuring to result in additional one-time charges, and also anticipate that the deteriorating market conditions for consumer discretionary items will continue for the foreseeable future,” Williams wrote in a research note to investors.

The consensus among analysts points to a rough end to the year for the Illinois-based Brunswick Corp. Analysts surveyed by Thomson Reuters expected the company to lose 66 cents per share in 2008 and earn 65 cents per share the following year, the AP reports.

In addition, the AP reported on Monday that RBC Capital Markets analyst Edward Aaron told investors that both Brunswick and boat-seller MarineMax are in danger of violating debt covenants as sales continue to decline.

“Based on our revised forecasts, we estimate that both (companies) could trip debt covenants in the December quarter,” he said. “We expect that both companies will be able to manage through these issues, but the risk profile has certainly changed in the past few months.”

Aaron cut his price target for Brunswick to $9 from $15, citing the manufacturer's “deteriorating earnings outlook and growing balance sheet stress.”

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