By Wenjing Yang
Brunswick Corp., an Illinois-based leading boat, marine engine and fitness equipment maker, reported better-than-expected earnings, helped by strong growth in the fitness segment and solid domestic sales.
Net income for the fourth quarter ended Dec. 31 swung to $17.7 million, or 19 cents per diluted share, compared with a net loss of $9.3 million, or 10 cents per diluted share, a year earlier, 2 cents above the estimate of analysts polled by Bloomberg.
Revenues surged 10 percent to $1.08 billion from $986.1 million, but fell short of analyst expectations of $1.1 billion.
“Q4 earnings were slightly mixed, but overall, Brunswick enjoyed a strong quarter,” said Nathan Yates, an analyst at Forward View Consulting, in an email interview, adding that the sales miss mainly came from the boat segment.
Sales in the marine segment increased by 5 percent to $788.3 million from $748.4 million, while the fitness segment showed a strong 24 percent sales growth to $294.7 million from $237.7 million.
The company explained in the conference call that marine sales were adversely impacted by the timing of wholesale shipping activity and a weaker retail environment partially caused by greater uncertainty stemming from the U.S. elections.
From a geographic perspective, sales in the U.S and Europe were up 11 percent and 13 percent, respectively, while rest of the world sales were up 4 percent, as the international market showed soft retail demand, the company said.
2016 is the final year of a three-year strategic plan the company laid out in 2013.
“Our top line reflected the benefits of our acquisition strategy, particularly in our Fitness segment, and strong growth rates in both fiberglass outboard boats and marine parts and accessories,” said Brunswick Chairman and CEO Mark Schwabero, in a press release.
Analysts remain optimistic about the fitness segment in coming years, as that business is benefiting from health and wellness trends.
The possible tax cut under the new administration may also help further growth of Brunswick’s business overall as middle and upper-class Americans should have more disposable income for luxuries, Yates wrote in his research note.
“Our performance in 2016 puts us in a strong position to achieve the 2018 targets, while continuing to deliver strong free cash flow and invest in our business,” Schwabero said in the conference call.
The company stated in the press release that it expects revenue growth in 2017 to be in the range of 6 percent to 8 percent.
Shares of Brunswick closed at $57.57, up 75 cents or 1.3 percent.