Brunswick Corporation today reported results for the second quarter of 2023.
“Our businesses executed a strong second quarter, benefiting from market share gains, well-received new products, solid operational performance and diligent cost control,” Brunswick CEO David Foulkes said. “The new boat market remains challenging, and year-to-date new boat sales remain below 2022, but there has been relative improvement in recent months, with preliminary June U.S. SSI main powerboat retail turning positive and Brunswick outperforming the industry both in June and year-to-date.”
For the second quarter of 2023, Brunswick reported consolidated net sales of $1,702.3 million, down from $1,835.6 million in the second quarter of 2022. Brunswick reported second quarter sales were below prior year as a result of the lost production days due to an IT security incident the company experienced in mid-June 2023, most significantly felt in the propulsion and engine parts and accessories businesses, along with softer market conditions, particularly in value boats and lower horsepower engine product lines, while sales in each segment benefited from the impact of annualized price increases and new product performance.
“On June 13, the Company announced it was impacted by an IT security incident, which ultimately resulted in financial results that were lower than initial expectations,” said Foulkes. “The disruption associated with the IT security incident was most significant in our propulsion and engine parts and accessories segments and, because of the proximity to the end of the quarter, there was limited opportunity to recover within the period. Within nine days, the Company announced that all primary global manufacturing and distribution facilities were fully operational, and there are no significant residual impacts. The speed at which the Company recovered is a testament to the strength and resilience of our team.”
Brunswick Corporation 2023 Q2 results by segment:
Propulsion segment reported a 4% decrease in sales resulting from the factors noted above, along with planned reductions in lower horsepower outboard engine and sterndrive engine sales and production, offset by favorable product mix related to increased high-horsepower outboard engine demand, and higher sales to repower customers. Operating earnings in the quarter were also impacted negatively by timing related to capitalized inventory variances which was an equal benefit in the first quarter.
Engine Parts and Accessories segment reported a 13% decrease in sales as solid Products sales in the U.S. were offset by more seasonal third-party distribution sales as well as international market softness. Segment operating earnings were also impacted by the carry-over of start-up costs related to the newly opened distribution center.
Navico Group segment reported a sales decrease of 20%, driven by lower retailer orders, together with slow recovery of RV OEM production, partially offset by strong new product performance. Segment operating earnings declined as a result of the common factors listed above, which were partially offset by accelerated cost reduction actions and reorganization efforts.
Boat segment reported a 1% decrease in sales due to the impact of lower value product shipments and higher discounts although within expectations, partially offset by the favorable impact of prior year pricing actions and favorable performance in premium products.
Freedom Boat Club, which is part of Business Acceleration, had another strong quarter, contributing approximately 7% of sales to the segment.
“We are pleased with the improved trends in new boat retail and continued high Mercury retail market share in the second quarter, as well as the tremendous progress towards our strategic initiatives and significant actions to lower our structural costs. However, the impact of the IT security incident, combined with the continued pressure consumers are experiencing driven by elevated interest rates and higher prices resulting from cumulative inflation, lead us to be cautious regarding second-half financial performance. Additionally, we anticipate the ongoing uncertain market conditions are likely to create measured order patterns by our channel partners into the offseason. We continue to target marketing and promotional activities on select products to support the retail market and our channel partners, while remaining steadfast in balancing inventory and pipeline levels throughout the second half,” said Foulkes.
Brunswick Corporation’s full 2023 Q2 results can be viewed on the Brunswick Investors webpage.