SeekingAlpha  3 hrs ago  Comment 
DailyFinance  May 24  Comment 
Filed under: News, US, Good News NEW BRUNSWICK, N.J. (WPIX) — Courtney Donlon, 22, of East Brunswick has only been a nurse at Robert Wood Johnson Medical Center for nine months — but she stepped up to help save a life on a flight home from...
DailyFinance  May 17  Comment 
Filed under: News, US, Good News BRUNSWICK, Ohio (WJW) -- A student-athlete has defied the odds and inspired a community by persevering on the volleyball court despite being born with epilepsy and only one arm. Read...


Brunswick Corporation (NYSE: BC) sells leisure products such as boats, foosball tables, air hockey tables, bowling and billiards equipment, and fitness equipment. BC also owns and operates bowling centers in several countries and billiards stores in the U.S. Its marine division, which markets and sells outboard engines and boats, is five times the size of its nearest competitor, and BC commands more than 35% market share in boats and more than 50% in engines. The company earned $2.8 billion in revenue but incurred a net loss of $586 million in 2009.[1]

However, the U.S. boating industry has seen a major decline in sales, and Brunswick has felt the effects of this trend. BC offers a diverse set of boating products, from the low end of the market to the yachts in its Hatteras and Meridian brands, and the decline in consumer demand has negatively affected sales numbers across all its products in the past three years. Also contributing to Brunswick's struggles is a continued rise in used boat sales, which now make up over 60% of total sales in the marine industry.

The decline in the boating business certainly impacts Brunswick's balance sheet, as 80% of its revenues come from the marine segment, but the diversity of its portfolio may help it to withstand the current down-cycle. Health & Wellness is a rapidly growing industry where Brunswick owns three recognized brands, Life Fitness, Hammer Strength, and ParaBody. Bowling and billiards sales, meanwhile, remain flat and continue to account for less than 10% of the company's total revenues. These two sectors lend stability to the company in a period of high volatility in marine sales.

Company Overview

Business Segments[2]

  • Marine Engine (51% of net sales): consists of the Mercury Marine Group, which manufactures sterndrive propulsion systems, inboard engines and outboard engines under the Mercury, Mercury MerCruiser, Mariner, Mercury Racing, Mercury SportJet and Mercury Jet Drive, MotorGuide, Axius, Zeus and MerCruiser 360 brand names. In addition, Mercury Marine manufactures and markets marine parts.
  • Boat (22% of net sales): consists of the Brunswick Boat Group which manufactures and markets fiberglass pleasure boats, luxury sportfishing convertibles and motoryachts, offshore and aluminum fishing boats, and pontoon and deck boats. The Boat Group is comprised of the following boat brands: Cabo sportfishing express boats and convertibles; Hatteras luxury sportfishing convertibles and motoryachts; Sea Ray yachts, sport yachts, sport cruisers and runabouts; Bayliner sport cruisers and runabouts; Meridian motoryachts; Sealine yachts and sport cruisers; Boston Whaler, Lund, Triton and Trophy fiberglass fishing boats; and Crestliner, Cypress Cay, Harris, Lowe, Lund, Princecraft and Triton aluminum fishing, utility, pontoon and deck boats.
  • Fitness (18% of net sales): is comprised of its Life Fitness, which makes cardiovascular fitness (including treadmills, total body cross-trainers, stair climbers and stationary exercise bicycles) and strength-training equipment under the Life Fitness and Hammer Strength brands. The company is the largest manufacturer of commercial fitness equipment in the world.
  • Bowling and Billiards (12% of net sales): is comprised of the Brunswick Bowling & Billiards (BB&B) division. The company makes consumer billiard tables, Air Hockey table games, foosball tables and related accessories. In addition, BB&B operates 100 bowling centers in the United States, Canada and Europe.

Business Growth

FY 2009 (ended December 31, 2009)[1]

  • Net sales fell 41% to $2.8 billion. The company attributes the loss to the sluggish global economy which resulted in a decrease of marine industry demand. Sales decreased in all of the company's product and regional segments.
  • The company incurred a net loss of $586 million, an improvement over the net loss of $788 million in the prior year.

Trends and Forces

  • The US Marine Industry is in decline.: Since 2000, the US Marine Industry has seen a steady decrease in demand for its products. Brunswick attributes this decline to two factors: lack of disposable income and higher boat prices. Although the average amount of disposable income has increased since 2000, the rate of growth has slowed, and the price of necessities such as food, clothing,gasoline, and healthcare have increased. This has negatively impacted consumer willingness to purchase the types of products Brunswick sells. The other factor is that boat prices have been rising. This has been caused by increasing low-emission regulations and rising input costs (such as oil, aluminum, and copper). The following chart shows the decline of the US Marine Industry since 2000:
  • The cost of raw materials is rising.: Brunswick gets its raw materials from a variety of sources and thus, is not that susceptible to sudden supply shocks. It uses oil, aluminum, steel and resins in its manufacturing processes. As a result, Brunswick has been feeling the effects of the rising oil prices, aluminum prices, steel prices, and other raw materials. For example, rising costs of oil based products such as resins and foam make it more expensive to manufacture marine products. Also, rising energy costs make operating bowling centers more expensive because the costs of air-conditioning, heating, and electricity rise.[3]
  • Suffering from a sluggish economy: Brunswick's main products (boats, engines, fitness equipment, and recreational items) rely on discretionary spending from consumers. As a result, Brunswick is especially vulnerable to fluctuations in consumer confidence and discretionary income. Their products would be considered luxury consumption because people will not buy Brunswick's products if they are worried about their economic well-being. Most people consider boats, buying fitness equipment, and bowling & billiards accessories as luxury goods, not necessities. Also, rising interest rates make it more difficult for dealers and consumers to finance purchases of boats and marine engines. As a result, sales of Brunswick's marine products are negatively affected.
  • Asian competition: Low-priced competition can cut BC’s profit margin, and manufacturers in Asian countries with developing economies have traditionally priced aggressively to compete with Brunswick. They are able to do this because of low labor costs and fewer regulations. Lately, the group that has been most significantly affected is the Marine Engine group. As a result, Brunswick Corporation's profits are reduced because they must lower their prices. It also becomes extremely difficult when compounded with the other trend of the rising cost of raw materials. Brunswick is often unable to pass on rising costs to consumers because of Asian competition.
  • Potential distribution problems: Brunswick relies on approximately 7,000 independent third-party dealers to sell its products. If these dealers experience lower profit margins from higher costs or lower prices, then this would adversely affect Brunswick's profits. Higher costs can result from rising interest rates, higher rents, labor costs, taxes, and compliance with new regulations. If dealers are unable to operate profitably, then it is possible that they will no longer be part of Brunswick's distribution network. In this case, Brunswick will have a difficult time selling its products to consumers.
  • Poor weather conditions will deter people from boating: Weather conditions can have a significant impact on the sale of Brunswick's products. The marine engines and boats groups generally have stronger sales in the spring and summer. Good weather during this time encourages people to go boating, and this helps Brunswick reach customers. However, bad weather such as excessive rainfall, drought, and cool temperatures can reduce demand, and in years with heavy precipitation Brunswick's sales suffer. Also, hurricanes can disrupt Brunswick's distribution network in the U.S. Atlantic and Gulf coasts. Severely inclement weather on weekends, holidays, and the winter (times when demand for bowling is high) can hurt sales from the bowling & billiards group.


Brunswick has many competitors but no one company competes with it in all four sectors (boats, marine engines, fitness equipment, and bowling & billiards equipment). Brunswick is a market leader all four areas. It is the largest manufacturer of recreational boats by dollar sales and unit volume, and the largest manufacturer of marine engines. Brunswick's fitness brands - Life Fitness, Hammer Strength, and ParaBody - also make Brunswick the largest producer of commercial exercise equipment.

In the boating and marine engines industry it faces competition from Genmar Holdings, Yamaha Motor (YAMHF), Marine Products (MPX), Fountain Powerboat Industries (FPB), and others. The Industry is extremely fragmented with hundreds of different brands. Brunswick, however, controls 35% of the market share in boating, and over 50% of the market for the sale of outboard engines.

The bowling industry is highly fragmented with small business, but Brunswick must compete with market leader AMF Bowling which owns and operates 340 centers in the United States, compared to BC's 107 locations. Bowl America Inc A (BWL) is another competitor. The Bowling Industry is extremely fragmented with the biggest two companies owning 400+ centers and the next three largest companies owning a combined total of 50 centers. The total number of bowling centers is 5,498.

In the fitness equipment industry companies such as Nautilus Group (NLS) and Cybex International (CYBI) compete with Brunswick. Brunswick is the largest manufacturer of commercial fitness equipment and is a leader in the manufacture of consumer fitness equipment. Life Fitness is a leading brand and is found in many gyms nationwide.

One clear difference Brunswick has amongst its competitors is that it has many different products. Therefore, it is less vulnerable to downturns in one sector. For example, a decline in the bowling industry would impact Brunswick's competitors significantly, while Brunswick could absorb the losses because of its wide base.


  1. 1.0 1.1 BC 2009 10-K "Selected Financial Data" pg. 22
  2. BC 2009 10-K pg. 1-3
  3. BC 2009 10-K "Raw Materials and Supplies" pg. 5-6
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki