Boats and marine motors are a painfully cyclical business, with sales booming in good times, slumping rapidly in bad. We are apparently in the latter at present, based on multiple quarterly reports coming in from around the industry.
Part of the problem is a remaining hangover from the covid boom, when many dealers ordered huge inventories as sales went off the charts. The boom came to a screeching halt, and now many yards still have boats and motors they can’t get rid of, so they’re not ordering more from the manufacturers.
Brunswick is a case in point. The company just reported consolidated net sales of $1.27 billion, a decline of 20.1% from $1.6 billion in the year-ago quarter. Adjusted operating earnings were down 45.3% to $125.9 million. The company’s Mercury Marine subsidiary laid off 1,700 workers at the main Fond du Lac plant in July.
But all the news was not bad.
“Our businesses delivered solid results as our continued market share gains, wealth of new products and expanded contribution from recurring revenue businesses resulted in third quarter financial performance in line with expectations despite the challenging marine market,” CEO David Foulkes said in a statement.“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.
However, the propulsion segment reported a 32% decrease in sales. Additionally, operating earnings were below the prior-year quarter due to lower sales and the impact of absorption from decreased production levels.
Navico Group’s sales—including Lowrance products--were down 14%, driven by reduced sales to boatbuilders due to lower production levels..
“With the majority of the retail selling season behinds us, the 2024 U.S. marine retail market is trending to our most recent forecast of down approximately 10%, with wholesale production of boats and engines down more significantly,” Foulkes said in the statement.
Nimbus Group (which produces and markets powerboat brands including Alukin, Aquador, Bella, Nimbus and U.S. builder EdgeWater) says its sales have decreased by 20 per cent during the third quarter 2024. The business has tied up a lot of capital due to low demand, which has also had a negative impact on its cash flow.
“The weak market trend of recent years is the type that affects our industry periodically, which we have learned from our many years in the business,” says Jan-Erik Lindström president and CEO introducing the quarter’s results (the full report is online). “Another lesson we have learned during these periods is to adapt and prepare for the market when it rebounds, which always happens sooner or later.”
Thus a decision was made to reduce production capacity in Finland. Lindström says that management must be capable of taking decisive action. “That said, it is not done lightly, because it affects people’s daily lives.
“However, on the other end of the scales the daily lives of many more people are at stake, because no company can be successful in the long term if it is unable to adapt.
What Lindstrom did not mention is that there are now a half-dozen or more brands competing in what was a brand new segment just a few years back, the “Nordic Craze” that combined a different look with impressive performance, smooth ride and minimal horsepower requirements, primarily coming from Jan-Erik Viitala’s Axopar first.
Volvo Penta’s net sales for Q3 2024 decreased 5 per cent compared to the same period in 2023. The company says the decrease was largely driven by lower demand for smaller engines, with net order intake falling by 18 per cent and deliveries decreasing by a similar margin.
Grand Banks and other builders of large yachts have not been impacted by the slump in the marine business seen for smaller boats and the motors to power them. (Grand Banks)
As is often the case, large yachts were less impacted by the slump—potential customers for these boats are more likely to have plenty of discretionary funds to buy whatever they want despite economic slumps.
Grand Banks, builder of trawler-type world-ranging yachts, just reported quarterly profit rose 95% year-over-year to $4.1 million, and revenue rose 29.1% to $30.3 million. Gross profit margin for the quarter remained stable at 32.6%. The company reports some $88 million in orders for new boats in 2025-26.
While there’s more than enough bad news in the industry to go around, odds are good that the pendulum will swing the other way—perhaps after the election—and good times will return to those who build boats and motors as well as to those of us who use them.
— Frank Sargeant
Frankmako1@gmail.com
