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Boat Profitability Returns for Brunswick Marine

A prediction by its CEO that Brunswick Corp’s boat business will return to profitability in 2014 is welcome news to an industry that’s been struggling with sales and profitability since 2008.

CEO Dustan E. McCoy told attendees at the annual Raymond James Institutional Investors Conference that Brunswick Marine, the world’s largest manufacturer of pleasure boats, has significantly grown market share in boats under 40 feet during the downturn.

Growing penetration in the under-40 segment sets the stage for earnings growth from parts and accessories, which are the core for business growth, McCoy told conference attendees. McCoy’s optimistic tone comes on the heels of a report from marine industry leaders in which almost 55 percent expected sales to increase between 5 and 10 percent this year, according to a survey by GE Capital, Commercial Distribution Finance. Those results closely mirror CDF’s own forecast of 8 percent growth for the U.S. marine industry this year.

All three fresh growth predictions come as the boating industry looks to emerge from a five-year slump that saw sales dip 5.8 percent from 2008 to 2013. McCoy told institutional investors at the conference that Brunswick’s market share growth, even during a time when overall sales slumped, is positioned for its first profitability in two years. As an example, he cited the Mercury engine line that, despite a market that’s just over half what it was in 2007, expects to post the biggest profits in its 75-year history.

Meanwhile, in the CDF survey of marine industry leaders, 54.7 percent expected to see sales increase in the 5-10 percent range, up from 43 percent who were that optimistic a year ago.
In touting Brunswick’s profitable forecast, McCoy said the engines his company has on waters nationwide will drive the parts and accessories business, which will respond with great service and the ability to quickly meet the demand of its dealers and their customers.

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