Why Brunswick is selling Sea Ray

The announcement by Brunswick in December 2017, of its decision to sell its well-known Sea Ray brand (which includes the Meridian brand) came as a surprise to many, but it’s one the organisation has apparently been thinking about for a while.

In its recent Q3 earnings release issued on October 26, 2017, Brunswick CEO Mark Schwabero noted: “As previously discussed on the second quarter call, we significantly lowered production in our large fiberglass sterndrive / inboard boat category as we meaningfully reduced pipelines from second quarter levels in response to weak retail demand over the last several quarters.”

The earnings report gave the financial impact of this by stating that the “boat segment, which manufactures and distributes recreational boats, reported net sales of $309.3m for the third quarter of 2017, a slight increase from $307.0m in the third quarter of 2016.

“For the third quarter of 2017, the boat segment reported operating earnings of $0.1m.

“This compares with operating earnings of $6.8m in the third quarter of 2016. The boat segment's revenue reflected strong growth in the aluminum outboard boat business, particularly in pontoon boats.

“As previously mentioned, sales within the large fiberglass sterndrive / inboard boat category declined in the quarter…”

Brunswick says projected 2017 sales for Sea Ray are approximately U$380.00m and the target completion date of the divestiture is the first half of 2018.

Going forward the organisation will concentrate on developing its portfolios of engine, boat, parts and accessories businesses with a focus on the outboard segment which it sees as less cyclical as earnings are more heavily tied to boat usage versus new boat demand.

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