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.
In a move already seen in the automotive sector but not yet in the RV industry, boat builder Brunswick Corp. is adding a payment protection promotion to its sales effort through the July 4 weekend.
From Memorial Day through the Fourth, Lake Forest, Ill.-based Brunswick will make the monthly payments for purchasers of its Bayliner, Maxum and Trophy boat brands who may lose their jobs due to current economic conditions.
Under the plan, Bayliner, Maxum and Trophy will pay up to nine months of payments if the boat buyer loses his or her job within a year after the boat purchase, according to a news release.
“In today’s economy, it is important to alleviate consumer concerns over many issues, including the potential of job loss,” said Brunswick
chairman and CEO Dustan E. McCoy. “So, we’re addressing it in an effective and impactful manner within the marine community. These brands aim to restore some confidence for the American boat buyer so they can make their dream boat purchase this summer, because we stand behind them not only with quality products, but also with resourceful financing and insurance options.”
Payment Protection is offered for all models in the Bayliner, Maxum and Trophy brand lines, with the qualifying monthly payments going up to
$500, McCoy explained. Customers must take delivery of their new boats by July 6.
“These brands are among the first in the marine industry to launch such a large-scale payment protection program, taking our cue from similar efforts that have been used successfully in the automotive industry by Hyundai, Ford and General Motors,” said Andy Graves, president of Brunswick’s U.S. Marine and Outboard Boat Group divisions. “We’re helping our dealers remove an important barrier to sales and reduce their inventories, while also offering true peace of mind for our boat customers. People are understandably anxious in this economy. Payment protection can help allay some of those fears, and help more of our customers experience the joy of boating this summer.”