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  1. #1

    Mercury Marine/Brunswick earnings

    Marine Engine Segment
    The Marine Engine segment, consisting of the Mercury Marine Group and
    Brunswick New Technologies (BNT), reported net sales of $412.8 million in the
    first quarter of 2003, an 11 percent increase compared with $370.4 million in
    the year-ago quarter. The favorable currency effects of a weakened dollar,
    and the full effect of recent acquisitions, most notably from BNT, largely
    drove the sales increase for the segment. Excluding these factors, sales were
    up slightly versus the year-ago quarter.
    Operating earnings in the quarter declined to $19.3 million versus $24.7
    million a year ago. Operating margins were 4.7 percent compared with 6.7
    percent in the first quarter of 2002.
    "More than half of the margin decline was attributed to higher pension,
    health care and insurance costs," Buckley explained. "Engine segment
    operating margins also were adversely affected by a shift in mix from classic
    two-stroke engines to lower-margin four-stroke engines, poor weather during
    the quarter that led to lower sales of higher-margin parts and accessories,
    and unabsorbed costs due to production slowdowns to keep inventories at
    appropriate levels."
    "While our initial expectations were that marine retail would be relatively
    flat for the year," Buckley said, "the retail markets have gotten off to a
    slower-than-anticipated start. This was due to the timing of the war in Iraq
    and the resulting low consumer confidence coming just as the boating season
    was beginning. Further, competition in the marine engine segment, has also
    intensified during the quarter with some manufacturers offering deep
    discounts," Buckley said.
    "With the widest array of engines among all manufacturers, nearly 65 years
    of uninterrupted service to our dealers and customers, and continuing
    investments in new products and technologies, Mercury is well poised for the
    future," Buckley said. "We believe initiatives such as Project 'X', our game-
    changing, high-horsepower four-stroke outboard engine due to arrive in time
    for next year's boating season, and new integrated marine electronics products
    will further extend our leadership."

    Boat Segment
    The Brunswick Boat Group comprises the Boat segment and includes the Sea
    Ray, Bayliner, Maxum, Sealine, Hatteras, Boston Whaler, Meridian, Trophy, Baja
    and Princecraft boat brands. The Boat segment reported net sales for the
    first quarter of $378.6 million, up 7 percent compared with $353.9 million in
    the year-ago quarter. Operating earnings for the quarter rose to $14.1
    million, up from $3.3 million recorded during the corresponding period last
    year. Operating margins in the quarter showed good progress, coming in at 3.7
    percent versus 0.9 percent for the year-ago period.
    "The improvement in operating margins is a testament to our Boat Group
    continuing to do a better job of leveraging top-line growth through operating
    efficiencies and other improvements," Buckley said. "As for sales, we saw
    good gains at Sea Ray, which experienced more normal wholesale activity this
    year compared with the year-ago quarter when pipeline inventories were being
    adjusted. We are particularly encouraged by the warm acceptance of our many
    new products and innovations across all 10 of our premier boat brands."
    "Sales of small boats such as runabouts, deck boats and cruisers have
    improved, led by the Bayliner 175 that we introduced last year. This boat has
    helped re-establish Bayliner as the leader in family boating. An entry-level
    boat, the Bayliner 175 offers an engine and trailer package with a suggested
    retail price of $9,995," Buckley said. "The market still remains challenging
    for larger boats."

    Looking Ahead
    Buckley noted that the uncertain economy, the situation in the Middle East
    and SARS continue to cloud the outlook for the remainder of the year. "Though
    we had overall good results in the first quarter, we must nevertheless remain
    guarded and vigilant as to how our markets will react to the economic and
    geopolitical picture," Buckley explained. "Indeed, the war with Iraq, and its
    subsequent effects on consumers and retail activity, came at a difficult time
    for the marine industry, which is traditionally the most active in the second
    quarter. It remains to be seen how markets will react as the war winds down.
    Given that, we believe our earnings per share for the year will be in the
    range of $1.40 to $1.50, compared with the $1.14 reported for 2002. This
    would indicate EPS for the second quarter of 2003 of between $0.50 and $0.55,
    compared with $0.51 a year ago."
    Headquartered in Lake Forest, Ill., Brunswick Corporation is a manufacturer
    and marketer of leading consumer brands including Mercury and Mariner outboard
    engines; Mercury MerCruiser sterndrives and inboard engines; Teignbridge
    propellers; MotoTron electronic controls; Northstar marine electronics; IDS
    dealer management systems; Sea Ray, Bayliner, Maxum, Hatteras, Meridian and
    Sealine pleasure boats; Baja high-performance boats; Boston Whaler and Trophy
    offshore fishing boats; Princecraft fishing, deck and pontoon boats; Life
    Fitness, Hammer Strength and ParaBody fitness equipment; Brunswick bowling
    centers, equipment and consumer products; and Brunswick billiards tables.

  2. #2
    Registered TEAMBAJA's Avatar
    My Boats:
    24 OUTLAW
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    Dec 2002
    Bucyrus, Ohio
    Can somebody sum this up in about 1 or 2 lines. I dont feel like reading.

  3. #3
    Platinum Member Charter Member
    My Boats:
    Join Date
    Jan 2001
    so. WI
    Originally posted by TEAMBAJA
    Can somebody sum this up in about 1 or 2 lines. I dont feel like reading.
    In a nutshell?

    They're making money, and due to the hefty prices they charge for their products, we're the major contributors.

  4. #4
    Registered Peconic's Avatar
    My Boats:
    2003 290 Kryptonite
    Join Date
    Oct 2002
    Quogue, NY
    Brunswick: Sales up 11% for Q1/03, but backing out acquisition and FOREX, sales flat. Margins under pressure.
    Using Brunswick as indicator for industry: Overall sales flat. Most interesting segments are top end and bottom end. Margins under pressure.

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