LAKE FOREST, Ill. — Brunswick Corp. saw sales plummet 36 percent in the third quarter of 2009, but nearly doubled its cash on hand to $624.1 million, according to a release from Brunswick today.
Total sales of $665.8 million, down from $1,038.8 million a year earlier, were hurt primarily by marine sales, which dropped 40 percent from year-ago levels. That led to a net loss of $114.3 million, or $1.29 per diluted share.
The consolidation of manufacturing operations in Fond du Lac, Wis., is expected to help the company’s bottom line going forward.
“This consolidation, combined with the net fixed-cost reductions achieved over the past two years, should help uniquely position Brunswick for continued market leadership in our marine and recreation businesses,” Brunswick’s Chairman and CEO Dustan E. McCoy said in the release.
Both boat and engine segments report operating loss
The Marine Engine segment reported net sales of $363.5 million, down 29 percent from $515.2 million in the year-ago third quarter. International sales, which represented 41 percent of total segment sales in the quarter, declined by 27 percent.
Sales were off across all Marine Engine operations, with sterndrive engines experiencing a greater sales decline than outboard engines. Sales from the segment’s domestic marine service, parts and accessories businesses, which represented 35 percent of total segment sales in the quarter, were only down mid-single digits.
For the quarter, the Marine Engine segment reported an operating loss of $13.4 million, including restructuring charges of $18.8 million.
Mercury’s manufacturing facilities continued to cut production rates and take plant furloughs during the quarter in response to lower retail demand and to reduce pipeline levels.
Brunswick’s Boat segment reported net sales for the third quarter of 2009 of $118.2 million, down 62 percent compared with $314.2 million in the third quarter of 2008. International sales, which represented 43 percent of total segment sales in the quarter, decreased by 60 percent during the period. For the third quarter of 2009, the Boat segment reported an operating loss of $86.7 million, including restructuring charges of $6.6 million. This compares with an operating loss of $536.3 million, including impairment and restructuring charges of $491.6 million, in the third quarter of 2008.
Inventory strategies expected to continue to impact sales and earnings
The company’s cash and cash equivalents were $624.1 million at the end of the quarter, up from the 2008 year-end balance of $317.5 million. Brunswick said its increased cash position resulted primarily from a change in certain current assets and current liabilities, net financing activities and net tax refunds, partially offset by net losses experienced in the nine-month period and pension contributions.
“As we enter the fourth quarter of 2009 and begin planning for 2010, our near-term operating and financial strategies will continue to be focused on maintaining strong liquidity without additional borrowing, taking all reasonable actions to protect our dealer network, and positioning ourselves to take advantage of improvements in economic conditions as they occur,” McCoy said. “Strategic actions pertaining to our inventory management and pipeline reduction strategy will continue during the fourth quarter, with a target to further reduce the number of boats in our backyard and to minimize the seasonal growth in pipeline inventories. These actions should continue to negatively affect our sales and earnings as they have in the previous three quarters.”
To read Brunswick’s complete report, click here.