Financial statements of the major groups at the end of July 2024 regarding NEW BOAT sales.
This article is a follow-up to the previous one published in May 2024 concerning the slowdown in sales for manufacturers listed on the stock exchange. Many are in their 2nd quarter of the year ending June 30, 2024.
For most, it’s looking a lot like an unpleasant headwind, with rather pronounced declines unfortunately observed since mid-2023.
The question is, what will the 3rd quarter and the rest of 2024 be like?
We’re talking here, of course, about sales of new boats, and these results are for manufacturers whose customers are dealers.
So, if dealers are reducing their inventory, it’s because consumers are less likely to buy a new boat.
As we look ahead to 2025, dealers are already placing their orders in anticipation of the 2025 season (we’re talking about the familiar term Booking), so how will they react to a fragile market?
Fortunately, the pre-owned boat market is doing well.
Indeed, the second-hand market suits it quite well, given the circumstances. The market for recent and very recent boats is experiencing very attractive price reductions, which clearly favors the yachtsman who is in the market to buy.
We are definitely in a buyer’s market, due to a relatively abundant supply, mainly on the American side, which has led to lower prices than in previous years.
As for the new luxury tax, of course it doesn’t apply to boats outside Canada, just like the GST and QST.
Of course, it hits Canadian dealers hard, but the U.S. market is also down sharply, and they don’t have this extra sales tax like the Europeans.
Let’s just say that the southern U.S. has never been so popular. Also, for a boat built outside North America, there’s no 9.5% duty either if the boat remains outside Canadian waters.
I’m referring here to the following brands (the best known) regarding the 9.5% duty (if the boat is already in U.S. territory):
Azimut, Atlantis
Ferretti, Pershing, Riva
Beneteau, Jeanneau, Prestige, Lagoon
Princess Yachts, Sunseeker, Fairline, Sealine
Riviera, Maritimo
Absolute, Galeon, Cobrey, Sessa, Greenline, Cranchi
Horizon, Leopard, Aquila, Fountaine-Pajot
And all brands manufactured outside North America
The team of brokers at ItaYachtsCanada and its OwnerBoat division are there for you, to keep you informed of market trends and, above all, to help you take advantage of bargains, no matter where you are located (Canada, United States or Europe).
Here are the results of some groups like :
Beneteau Group
The American company BRUNSWICK
The Chaparral and Robalo brands
The Chris-Craft brand and Barletta pontoons
Mercury engines.
BENETEAU GROUP
(which includes the dominant brands Beneteau, Jeanneau, Prestige, Lagoon, etc.).
A difficult first half for Beneteau
Boat sales fell by 31.5% in the first six months of the year, mainly due to lower sales of small boats.
Groupe Beneteau published its results for the second quarter and first six months of 2024 on July 22 (2024).
Yacht division sales fell 31.5% in the first half, mainly due to lower sales of small units (Four Winns, Wellcraft, Glastron, Scarab).
Second-quarter yacht sales fell by 110 million euros ($119.45 million), or 25.1% year-on-year. Yacht sales in the Americas saw the most significant decline, posting a 49.7% drop compared with the first half of 2023.
First-half sales of sailboats fell to 268 million euros ($291.1 million) from 352.9 million euros ($383.27 million), down 24.1% year-on-year. Motorboat sales fell from 443.1 million euros ($481.23) to 272.2 million euros ($295.69), down 38.6% on the same period last year.
“Macroeconomic and geopolitical uncertainty is weighing on the entire boat sector, both in Europe and the United States,” said CEO Bruno Thivoyon in a statement. “Distribution networks have begun, as expected, to reduce their inventories in the first half of 2024.
“After a record year in 2023, our sales to end customers (sell-out) showed good resilience to the market slowdown in the first half thanks to our premiumization strategy.
Only our US brands, most of which are still positioned in the small-unit segments in the United States, where the transformation of the product offering is accelerating, were significantly affected.”
The company gave the following guidance for the second half of 2024:
“In a still highly uncertain environment, boat users maintained their wait-and-see attitude. Inventory reduction within the distribution networks should continue in the second half of the year, and should reach between 100 and 150 million euros ($108.6 million) over the full year, as initially forecast.
In this market environment, the boats division expects annual sales of around 1 billion euros ($1.1 billion).”
Brunswick sales down in second quarter
Major products: Mercruiser, Mercury, Bayliner, Cypress Cay, Lowe, Sea Ray, Harris, Boston Whaler, Lund, Crestliner, Heyday, Navan, Princecraft, QuickSilver)
Secondary products: B&G, Lowrence, Attwood, Marinco, Simrad, Mastervolt, Relion, etc…
Overall net sales fell by 15.2%, and the boat and propulsion segments each declined by more than 20%, according to information provided by the Group on July 26.
Brunswick Corp. reported second-quarter net sales of $1.44 billion, down 15.2% from $1.7 billion in the year-earlier quarter. The company attributed this decline to lower dealer orders and increased discounts in certain segments.
Operating income declined year-on-year due to the impact of lower net sales and higher manufacturing costs related to lower production.
“With high interest rates continuing to weigh on consumer budgets and reduce discretionary spending, the introduction of new models in early June did not catalyze boat purchases as we had anticipated, and our second-quarter results were slightly below our expectations,” CEO David Foulkes said in a statement.
“The continued slowdown in retail sales, combined with higher levels of discounts and carrying costs, has increased pressure on dealer and distribution channel profit margins, resulting in persistently conservative wholesale ordering patterns, which in turn encourage OEMs to maintain lower boat production rates during the main selling season, impacting Navico Group’s propulsion and OEM orders,” he added.
The company expects annual sales to be down around 10% on initial forecasts. Brunswick has been working with dealers to clear old inventory and said that the remaining inventory on the ground is fresh, with around 85% of current units.
“We continue to focus on leveraging our new products and adjusting production levels to maintain or gain share in key categories, while diligently managing field inventory levels to end the year with weeks of inventory at appropriate levels and units lower than last year,” Foulkes said.
Mercury continues to gain market share in outboard motors, with over 48% of the overall national market. In addition, the controls, rigs and propellers categories recorded higher operating margins than in the same period in 2023.
The propulsion segment recorded a 21% drop in sales, and the boat segment saw a 23% decline. Freedom Boat Club contributed around 10% to boat segment sales, and added flagship sites in Denmark and the UK.
For the remainder of 2024, Brunswick has adjusted its net sales forecast to a range of $5.2 billion to $5.4 billion.
Second-quarter sales were down 40% for Marine Products Corp (July 2024).
The parent company of Robalo and Chaparral said it was continuing to resize production “to align with dealer demand”.
Marine Products Corp, the parent company of Chaparral and Robalo, reported second-quarter net sales of $69.5 million, down 40% year-on-year. Net income was $5.6 million, down 61% on the year-earlier quarter.
“We continue to navigate a challenging environment affected by high inventory levels in the dealer network relative to current demand,” said Ben M. Palmer, president and CEO, in a statement. “Interest rates also remain relatively high, resulting in high carrying costs for our dealers and financing costs for consumers. We continue to support our dealers with aggressive promotions and expand these programs in a collaborative effort to drive sales and reduce channel inventory. Operationally, we have continued to adapt our production to dealer demand, reducing working hours and taking other cost-cutting measures.”
The decline in net sales is attributed to a 41% decrease in the number of boats sold during the quarter. The price/mix ratio increased by 1% thanks to higher selling prices, and sales continued to be affected by dealers’ efforts to reduce inventories.
Gross profit totaled $13.2 million, down 54% year-on-year, and gross margin was down 18.9%. This decline reflects lower sales volumes and the resulting manufacturing cost inefficiencies. Production schedules and labor costs were adjusted to meet demand.
Selling, general and administrative expenses amounted to $7.4 million, down 39%. This decrease is due to costs that vary with sales and profitability, notably incentive compensation, sales commissions and warranty expenses.
Winnebago revenues down 12.7% in fiscal third quarter. (June 2024)
Net revenues for the marine division amounted to $87.9 million in the quarter, down 31.8%.
Winnebago Industries, the parent company of Chris-Craft Boats and Barletta Pontoon Boats, reported sales of $786 million in the third fiscal quarter of 2024, down 12.7% on the same quarter of 2023. Gross profit amounted to $118.2 million, down 22% on the same quarter of the previous year.
“While market conditions in the outdoor industry remain challenging due to inconsistent retail trends and continued dealer discipline over field inventory levels, we are generally pleased with the resilience of our portfolio as our teams balance the pursuit of long-term market share, profitability and customer satisfaction across our premium brands,” said Michael Happe, president and CEO of Winnebago Industries, in a statement.
“Thanks to our towable RV and boat segments, we recorded sequential consolidated margin growth in the third quarter…and our Barletta pontoon retail market share reached double digits for the three- and six-month periods through April.”
Marine segment revenues for the quarter totaled $87.9 million, down 31.8%. Backlog stood at $62 million, down 57.6% on the year-earlier quarter. The company said this was “mainly due to lower unit volume linked to market conditions”, and that the reduction in backlog was due to “a cautious dealer network”.
Gross profit margin fell by 180 basis points to 15%. Selling, general and administrative expenses amounted to $69.1 million, up 3.7% from $66.5 million in the third quarter of last year. This increase is due to strategic investments in engineering, digital asset development and increased data and IT capabilities. Operating income of $43.5 million was down 46% on the $80.5 million recorded in the previous year’s quarter.
Net income was $29 million, and reported earnings per diluted share were $0.96. This was down from $1.71 per diluted share in the same quarter last year. This was down from $1.71 per diluted share in the same quarter last year.
At May 15, cash and cash equivalents totaled $318.1 million, and the company had outstanding debt of $695.4 million, with working capital of $581.9 million. Cash flow from operations amounted to $99.4 million in the third quarter of fiscal 2024.
The company has not provided guidance for the remainder of fiscal 2024.
Mercury Marine adjusts production
Changes to production schedules on most lines until the end of the year will affect around 1,700 hourly employees (communicated by Mercury in July 2024).
After reducing headcount at its Fond du Lac (Wisconsin) plant by almost 300 last month, Mercury Marine has announced that it is implementing production schedule changes that will affect around 1,700 hourly employees.
Brunswick said in a statement:
“Due to the continued slowdown in consumer demand in some of our markets, primarily as a result of continued high interest rates and short-term reductions in boat production by Mercury’s partner builders, Mercury has made the decision to adjust production schedules by the end of the year for most of our ranges to meet demand from our distribution partners. This decision will have an impact on around 1,700 hourly employees at our Fond du Lac plant.”
This article is based on data published by the TRADE ONLY TODAY website.
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