A decline in sales from the company’s larger fiberglass sterndrive engine business and inboard boats has prompted Brunswick Corporation (NYSE:BC) to jettison 90 employees and furlough 130 more at its Palm Coast, Florida production facility.
Those declines were partially offset by solid international sales. Despite the declines, Brunswick remains on track with its expectations due to positive market conditions and the upcoming launch of new models.
Lake Forest, Illinois-based Brunswick designs, manufactures, and markets recreation products worldwide. The company’s Marine Engine segment offers outboard, sterndrive, and inboard engine and propulsion systems. The company’s Boat segment provides fiberglass pleasure boats, yachts, sport yachts, fishing boats, aluminum and fiberglass fishing boats, pontoon boats, and utility boats.
Company spokesperson Daniel Kubera said the layoffs and furloughs “were to align our production levels with market demand in the 40- to 49-foot segment of our business, while continuing to maintain our production capabilities in stronger segments of the business.”
Brunswick will be holding an outplacement fair to assist those being laid off find other jobs. As for those on furlough, the company is offering unspecified measures “to help soften the impact upon those individuals.”
For the second quarter, ended July 1, 2017, Brunswick announced that revenue increased nine percent year-over-year to $1.35 billion.
Specifically, international sales, which represented 28% of the Marine Engine segment increased 11% compared to the prior year period. In the Boat segment, international sales, which represented 27% of total segment sales in the quarter, increased by 11%. International sales in the Fitness segment, which represents 48% of total segment sales in the quarter, increased by 17%.
However, second-quarter sterndrive engine sales declined as demand continues to be hurt by the shift to outboards and unfavorable global retail demand trends. As a result, the company adjusted its workforce, resulting in job losses and furloughs, which will take place in the third quarter.
For the second quarter of 2017, Brunswick reported net earnings of $119.4 million, or $1.32 per diluted share, a 10.5% increase over the $108.1 million, or $1.17 per diluted share, from the second quarter of 2016.
For the remainder of 2017, Brunswick expects to post another year of “outstanding earnings growth, with excellent cash flow generation,” and is “well-positioned to generate strong sales and adjusted earnings per share growth in 2017 and beyond.”
The company narrowed the range for its full-year expectations of diluted earnings per share, as adjusted, to $4.00 to $4.10. For 2017, the company will generate positive free cash flow in excess of $250.0 million.
“Brunswick Reports Second Quarter Results,” Brunswick Corporation, July 27, 2017.
“Aligning to market prompts layoffs at Brunswick,” Trade Only Today, July 28, 2017.