Brunswick Corp. reports 27-percent sales growth for 2004
January 28, 2005
Filed under Marine Finance
LAKE FOREST, Ill.— Marine industry giant Brunswick Corp. (NYSE: BC) reported net sales of $5,229.3 million for the year ended Dec. 31, 2004, up 27 percent from $4,128.7 million in 2003, according to a recent company statement.
Sales in 2004 benefited from acquisitions made earlier in the year, as well as incremental sales from acquisitions completed in 2003. Excluding acquisitions, net sales were up 16 percent, according to Brunswick.
Operating earnings reached $400.7 million for the year, up 81 percent from $221.4 million in 2003, and operating margins reached 7.7 percent versus 5.4 percent a year ago. Operating earnings for 2003 include a $25.0 million litigation charge ($16.0 million after tax, or $0.18 per diluted share) recorded in the first quarter of 2003. Excluding the litigation charge, operating earnings were $246.4 million and operating margins were 6.0 percent in 2003.
Net earnings for 2004 doubled to $269.8 million, or $2.77 per diluted share, compared with $135.2 million, or $1.47 per diluted share, in 2003. Excluding the previously mentioned litigation charge, net earnings totaled $151.2 million, or $1.65 per diluted share, in 2003.
For the year, higher sales and effective cost management helped to mitigate increased research and development (R&D) spending, higher variable compensation costs, costs of integrating acquisitions, investments in new manufacturing plants and higher spending to support new product introductions.
Fourth quarter seen as strong finish to the year
Brunswick reported net earnings of $58.8 million, or $0.59 per diluted share, for the fourth quarter of 2004, up 47 percent from net earnings of $39.9 million, or $0.43 per diluted share, for the year-ago quarter.
Led by double-digit improvements in the Marine Engine, Boat and Bowling & Billiards segments, operating earnings rose 42 percent to $83.4 million, compared with $58.7 million in the year-ago quarter, and operating margins improved to 6.3 percent from 5.4 percent.
For the quarter ended Dec. 31, 2004, net sales increased 23 percent to $1,333.8 million, up from $1,086.9 million a year earlier. Sales in the fourth quarter of 2004 benefited from higher boat volumes and acquisitions, according to Brunswick.
“We had a strong finish to an excellent year with our Marine Engine, Boat and Fitness segments posting double-digit sales increases for the quarter,” said Brunswick Chairman and Chief Executive Officer George W. Buckley. “Due to our continual emphasis on operations excellence and effective cost management, we leveraged these sales gains into increased operating earnings and a 90-basis-point improvement in operating margins to 6.3 percent for the final quarter of the year.”
Increase in retail demand expected
In looking ahead to 2005, Buckley said he anticipates “another year of increased retail demand for marine products, which we estimate will be up in the mid-single digits for the industry.”
He added that marine pipeline inventories stand at 30 weeks of supply for boats and 26 weeks of supply for engines, up two and four weeks, respectively, from the same time a year ago, which he believes reflects Brunswick’s marine dealers’ expectations for solid growth in 2005.
Buckley also anticipates that new product introductions “will drive our marine sales up in the mid-teens.”
For the company as a whole, increased volumes and a continued focus on effective cost management are expected to result in operating margin improvement of 70 to 100 basis points, Buckley noted.
He also stated that the company’s 2005 budget “assumes we will incur approximately $9 million in possible duties on outboard engines imported from Japan.”
“By leveraging an estimated 11 to 12 percent sales growth with improved operating margins, we are budgeting earnings for 2005 at $3.25 per diluted share,” Buckley said. “Given that we are still early in the marine season, and the challenges facing us with the transition to low-emission outboard engines, the number of new products scheduled for introduction and the start up of new manufacturing plants, we are estimating earnings per diluted share in the range of $3.15 to $3.30 for 2005, and $0.55 to $0.60 per diluted share for the first quarter of 2005. This compares with earnings per diluted share of $2.77 and $0.50 for the full year and first quarter of 2004, respectively.”
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