LAKE FOREST, Ill. — Brunswick Corp. today posted a first quarter net loss of $13 million, far narrower than the $184.2 million it lost in the first quarter of 2009. The loss came on total net sales of $844.4 million, up 15 percent versus last year.
In its earnings report, the company said low beginning-of-year marine dealer inventories led to increased production and wholesale shipments.
“Historically low marine dealer inventories as we entered the year led to improved wholesale shipments,” said CEO Dustan E. McCoy. “This, combined with significant fixed-cost reductions achieved over the past two years, enabled us to report our first quarterly operating profit since the first quarter of 2008.”
The company’s operating earnings were $10.1 million, a $137.6-million improvement from prior year. Cash totaled $552.4 million, up from a 2009 year-end balance of $526.6 million.
“The factors that positively affected our revenues and earnings in the first quarter of 2010, compared to the previous year, included: higher overall unit production and sales levels and improved fixed-cost absorption in our marine businesses, combined with lower discounts required to facilitate retail boat sales,” McCoy reported. “During the quarter, we also benefited from lower special tax items, cost savings from our fixed-cost reduction activities, lower restructuring and impairment charges, as well as reduced pension and bad debt expense. Partially offsetting these factors was higher interest expense.”
Mercury Marine Group
The Marine Engine segment, which consists of the Mercury Marine Group including the marine service, parts and accessories businesses, reported net sales of $445.7 million in the first quarter of 2010, up 30 percent from $343.9 million in the year-ago first quarter. For the quarter, the Marine Engine segment reported operating earnings of $26.5 million, including restructuring charges of $2.4 million. This compares with an operating loss of $50.6 million in the year-ago quarter, which included $11.7 million of restructuring charges.
Sales were higher across all Marine Engine’s main operations, the company said, except for low single-digit declines in the segment’s domestic marine service, parts and accessories businesses, which represented 22 percent of total segment sales in the quarter. The segment’s sterndrive engine business experienced the greatest level of growth.
Mercury’s manufacturing facilities ramped up production during the quarter in response to customer inventory requirements, according to the company. Higher sales, increased fixed-cost absorption, lower restructuring charges, fixed-cost reductions, as well as reduced pension and lower bad debt expense had a positive effect on operating earnings during the quarter.
Brunswick Boat Group
The Brunswick Boat Group, which includes 16 boat brands, reported net sales of $243.6 million for the first quarter, an increase of 19 percent compared with $205.3 million in the first quarter of 2009. For the first quarter of 2010, the boat segment reported an operating loss of $26.7 million, including restructuring and impairment charges of $4.1 million. This compares with an operating loss of $72.3 million, including restructuring and impairment charges of $25.0 million, in the first quarter of 2009.
Boat manufacturing facilities began to ramp up production during the quarter to address inventory requirements of their dealers. Higher sales, increased fixed-cost absorption, fixed-cost reductions, lower restructuring charges and reduced discounts required to support retail sales by dealers were the primary factors behind the segment’s reduction in operating losses in the quarter, according to Brunswick.
Click here for the complete Brunswick first quarter report.