Brunswick’s Profit Tops ‘The Street’s’ View

July 29, 2010 by RV Business Leave a Comment

Brunswick Corp, the world’s largest maker of pleasure boats, reported stronger-than-expected quarterly results today (July 29), lifted by increased shipments to dealers and cost-cutting, Reuters reported.

The news sent the company’s shares up about 7% in premarket trading.

But the improved numbers reflected a pickup in showroom stocking by optimistic dealers — not a rise in end demand by boat buyers.

While that has been a common theme in recent reports from other makers of hyper discretionary recreational vehicles, including motorhome-maker Winnebago Industries Inc, it raises the question of how sustainable the rebound will be.

While sales to dealers provide real revenue — Brunswick, like Winnebago, does not directly sell boats to consumers — those dealers are likely to curtail that inventory replenishment if consumers do not start showing up.

Recent economic reports suggest the industry still faces big challenges on that front. A government report earlier this week showed that job worries drove July U.S. consumer confidence to its lowest since February, with one in six people expecting lower income in the next six months, underscoring the precarious state of economic recovery.

Brunswick, which makes boats sold under more than a dozen brand names, including Bayliner, Hatteras, Sea Ray and Triton, as well as Mercury and Mariner brand boat engines, posted a second-quarter net profit of $13.7 million, or 15 cents a share, compared with a loss of $163.70 million, or $1.85 a share, during the comparable quarter last year.

Analysts on average expected the Lake Forest, Ill.-based company to report a net loss of 2 cents a share, according to Thomson Reuters I/B/E/S. Analysts expected sales of $960.25 million.

Sales at the company, which also makes fitness machines and bowling and billiards equipment, rose 41% to $1.015 billion.

Stripping out costs associated with the company’s ongoing restructuring and a one-time tax item, Brunswick said it made about 43 cents a share in the quarter. On that basis, analysts on average expected a profit of 2 cents a share.

In premarket trading, Brunswick shares were up 7% at $15.50 after closing Wednesday’s session on the New York Stock Exchange at $14.56.