Brunswick’s wholesale boat shipments lower than expected

DENVER, Colo. – With Brunswick Corp.’s first quarter earnings release scheduled for release on Thursday, RBC Capital Markets has adjusted its model to reflect significant downward pressure on wholesale shipments, the company reported in a statement sent on behalf of analyst Edward M. Aaron this morning.

“While retail trends appear in line with expectations, many dealers are simply unwilling/unable to replenish inventory in light of extremely depressed demand, excessive aged inventory and very tight floor plan lending standards,” Aaron wrote in the statement.

The company’s first quarter sales estimate of $746 million for Brunswick is below consensus of $790 million, Aaron stated.

“Our forecast assumes a 45-percent decline in total company sales, including a 54-percent decline for the marine segments,” he wrote. “We forecast a loss of $1.11 for the first quarter (similar to consensus), including $0.28 of restructuring. For the year, we now forecast a loss of $3.26, although we still expect modest cash flow generation.”

A silver lining
Aaron said news of depressed shipments has a silver lining: “the bottom could come sooner.”

“We will view BC shares as timely when we get the sense that dealers are resuming normal stocking patterns,” he wrote. “The timing of this remains very unclear, but anemic dealer orders in 2009 increase the probability of this happening by 2010.”

RBC has maintained its “Sector Perform” rating, explaining that the company continues to see significant long-term upside potential and is encouraged by the recent improvement in Brunswick's CDS spreads. It simply doesn’t have the visibility it needs “to get on board here,” he concluded.

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