Strong dollar continues to pressure Brunswick earnings

Brunswick Corp. reported a strong third quarter Thursday, but currency issues continue to slow growth outside the United States.

Sales were up for the industry’s largest manufacturer in the U.S. and Europe, but down for the rest of the world as a strong dollar hurts exports. The company is expecting a 4 percent impact on year-over-year comparisons, CFO Bill Metzger said during an earnings call Thursday.

For the third quarter, Brunswick estimates a $6 million impact, with an estimated $30 million for the year, he added.

Despite those challenges, the company still reported a 6 percent increase in sales versus 2014 — but it would be 11 percent on a constant currency basis, CEO Dusty McCoy said.

Canada has been especially hard hit. Industry sales were down “high single digits” in Canada as the country deals with a weaker Canadian dollar and a recession caused by low oil prices, McCoy said.

“That weakness was expected as dealers are now selling product they purchased” when the U.S. dollar was strong, McCoy said. “We’re expecting overall demand in Canada to be down high single digits or low double digits for the year.”

Overall, Brunswick saw its strongest growth in fiberglass boats, both outboard and sterndrive, with new products helping to drive demand, said COO Mark Schwabero.

New product has also been key in growth in engine sales, with Mercury’s new 75-, 90- and 115-hp four-stroke outboards making strong contributions, Schwabero said.

“We’re gaining market share, especially in our targeted saltwater, commercial and repower markets,” he said.

The new 350 and 400 hp sterndrives, introduced early in the 3rd quarter, have also performed well, he added.

“Our engine guys are doing a great job,” McCoy said. “Every piece of product we come out with is higher margin, more profitable … than anything it replaced.”

The biggest challenge has been keeping up with demand, McCoy said.

“We could have even more share gain if we could make engines at the rate we’re seeing demand,” he said. “We’ve been working hard on increasing capacity. As spectacular as the engine business is looking right now, when we get more capacity online, it will look even better.”

Click here to see the full earnings report or view a recording of the earnings call.


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