Tight Credit, Recession Impact Winnebago 2Q

March 19, 2009 by · Leave a Comment 

Winnebago Industries Inc. reported a net loss for its fiscal second quarter on an 81% drop in revenue, citing the impact of “extremely challenging market conditions” coupled with tightened credit by lenders.

“We anticipate continued softness in motorhome sales until we see improvement in the credit markets at the wholesale and retail levels and in consumer confidence levels,” said Bob Olson, chairman, CEO and president of the Forest City, Iowa-based motorhome maker.

Revenue for the quarter fell to $31.8 million from $164.2 million in the year ago period while the net loss was $10.4 million compared with net income of $2.5 million.

For the first 26 weeks of fiscal 2009 sales declined 73% to $101.2 million from $379.3 million for the first 27 weeks of fiscal 2008. The company reported a net loss of $20 million versus net income of $12.5 million.

Winnebago said that lower motorhome volume resulted in “inefficiencies due to reduced utilization of manufacturing facilities.” The company did benefit however, from a reduction of inventories of $10.5 million during the second quarter.

Also during the second quarter, Winnebago elected to participate in a “no net cost” loan program for $9.1 million through UBS AG, secured by a portion of the Auction Rate Securities (ARS) owned by the company in an account with them. As a result, cash and cash equivalents at the end of the quarter were $27.5 million.

Winnebago said that reduced dealer inventories reflected the pullback in floorplan lending, resulting in lower wholesale shipments.

“Even with a depressed retail market, I continue to believe that once our dealers’ floorplan lenders provide the dealers with sufficient credit to enable them to reorder product to more closely match retail sell-through, we will experience an increase in deliveries,” said Olson.

Looking forward, Winnebago said that its financial stability along with contraction among manufacturers would put it in a strong position once the market returns.

“While several major competitors are in very difficult financial circumstances, we are confident of our financial strength and competitive position in this economic recession,” said Olson. “We have enviable brand strength, quality products and financial stability to withstand the downturn.”

“In the short-term, however, we anticipate added competitive pressure from deeply discounted product in the marketplace from struggling manufacturers, in addition to the challenges from the ongoing turmoil in the credit markets. It is my belief that once the housing and stock markets recover, along with the shoring up of personal balance sheets with increased savings, consumer’s sense of wealth will improve and more normal spending patterns will prevail.”

To view the complete report go to Winnebago.

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