Brunswick confirms sales down 20.1 per cent in Q3

Brunswick Corporation has reported its financial results for the third quarter of 2024. The company’s consolidated net sales for the third quarter reached $1.27bn, reflecting a 20.1 per cent decrease compared to the same period in 2023.

The company’s adjusted operating earnings stood at $125.9m, down 45.3 per cent. Adjusted operating margins for the quarter were 9.9 per cent on an adjusted basis, or 450 basis points.

The news follows ‘below expectations’ second quarter results. Earlier this year, Brunswick sales were down 22 per cent in the first quarter of 2024.

The firm recently announced several changes to its organisational structure and senior leadership team, including the appointment of a new executive vice president.

David Foulkes, chief executive officer of Brunswick, remarks that the company’s businesses have delivered “solid results” despite the “challenging marine market” conditions. “Brunswick has been managing field inventory closely and adjusting production in line with demand, particularly in the U.S. outboard engines category, where the company gained 420 basis points of market share during the quarter.

“We continue to tightly manage field inventory across all our channels, and have adjusted production accordingly, yet are still gaining or maintaining share in key categories, including U.S. outboard engines, where Mercury delivered 420 basis points of share gains in the third quarter versus prior year.”

Foulkes says Brunswick continues to anticipate a decline of approximately 10 per cent in full-year new boat retail unit sales compared to the prior year. Retail discounting levels have remained high, and dealer reordering in some segments has been slower than expected. This has led to reduced production rates among many boat original equipment manufacturers (OEMs), which has impacted orders for both the Propulsion and Navico Group businesses. Despite these challenges, the company’s aftermarket-based businesses, including engine parts, accessories, distribution, and Freedom Boat Club, have performed well, supported by strong participation in boating activities.

Brunswick’s segments report sales decline in Q3 2024 results

The firm’s propulsion segment reported a 32 per cent drop in sales compared to the third quarter of 2023, a decline attributed to lower wholesale ordering and production adjustments, though market share gains helped offset some of this impact. Operating earnings for this segment were down due to the reduced sales volume and lower absorption of fixed costs, despite the company’s ongoing cost control efforts.

The engine parts and accessories business had a strong quarter, reporting record operating margins for any quarter, although sales were slightly down by 3 per cent. The completed transition of engine parts and accessories distribution to Brunswick’s new facility in Brownsburg, Indiana, has contributed to operational efficiencies and modest international sales growth compared to the prior year.

Navico Group, which experienced lower sales and operating earnings compared to the same quarter in 2023, was impacted by lower demand from marine OEMs and the timing of aftermarket orders. However, the company saw slight growth in international sales, and the business continues to benefit from its ongoing investments in product innovation.

In the boat segment, sales declined by 19 per cent, reflecting lower wholesale orders, higher discounting, and reduced production due to annual summer shutdowns. Freedom Boat Club, however, continued to grow, contributing approximately 12 per cent to segment sales, supported by recent acquisitions and consistent membership growth. This reflects a broader trend of boat clubs gaining popularity among consumers.

Looking ahead, Foulkes says that Brunswick expects the 2024 U.S. marine retail market to decline by approximately 10 per cent, with a more significant drop in wholesale production of boats and engines.

The company says it does not anticipate a significant change in OEM or dealer ordering patterns for the remainder of the year. However, Brunswick says it remains focused on managing production levels to maintain appropriate inventory and is preparing for a potentially stronger 2025.

Navan, a Brunswick Group brand, will formally debut in the North American market at the 2024 Fort Lauderdale International Boat Show.