Briggs & Stratton Lowers Sales Projection, Production Levels

Briggs & Stratton has lowered its fiscal 2013 sales and earnings projection as equipment manufacturers look to control inventories; retail market did show signs of strengthening in May-June, dealer inventory levels in "great shape."

Briggsand Stratton

Briggs & Stratton Corporation expects to report net sales and earnings below the guidance provided for fiscal 2013 (through June). The company has also lowered production levels in response to OEM production schedules to control inventories. However, the company says that U.S. sales have remained in line with overall industry estimates, and engine market share has remained in line with the company's original guidance.

"An extremely slow start to the spring lawn and garden season and a cautious approach to managing inventories after last year's drought has impacted the U.S. and European markets through the end of June," commented Todd J. Teske, chairman, president and CEO of Briggs & Stratton Corporation. "In response to the lower retail sales, almost all channel participants including mass retailers, dealers and equipment OEMs have been cautiously managing inventories, and therefore have been slow to re-order for the current season. Equipment OEMs have reduced production levels compared to last year, and thus we reduced our engine production in the quarter, negatively impacting absorption of plant operating costs in the near term. On a positive note, we have seen the retail market strengthening in May and June and continuing into July as we compare to last year's drought-impacted summer season, and we believe inventory levels at our dealers are in great shape heading into our next fiscal year."

Engines Segment Highlights

  • Fourth fiscal quarter 2013 Engines segment net sales are expected to be approximately $300 million.
  • Total engines shipped in the quarter were approximately 1.9 million units compared to approximately 2.1 million units in the prior year.
  • Production totaled approximately 1.6 million units in the quarter compared to approximately 2.0 million in the prior year.
  • Ending engine unit inventories were approximately 1.4 million compared to approximately 1.3 million units last year.

Effect on mowing equipment. Through the end of June 2013, Briggs estimates that the retail market for walk and riding mowing equipment has decreased by approximately 3-5% compared to the last season. The lower retail sales due to a late spring in the U.S. and Europe have not yet recovered in the current season. Estimates of U.S. industry shipments to retailers of walk mowers are consistent with last year through June while shipments of riding mowers has increased by approximately 3%. Briggs expects that by the end of the current season, retail sales of mowing equipment will be flat to slightly up for the season. Certain equipment OEMs have reduced inventories compared to the prior year in response to lower than anticipated retail sales. 

Products Segment Highlights

  • Fourth fiscal quarter 2013 Products segment net sales are expected to be approximately $203 million.
  • Manufacturing throughput reduced 15% in the quarter compared to the prior year in order to control inventories.
  • Domestic product inventories decreased by approximately $50 million compared to the prior year.
  • Dealer inventories are below average of last several years.

Mass merchants down, dealers doing well. The majority of the decrease in net sales compared to the prior year is due to our previously announced decision to exit the sale of lawn and garden equipment to U.S. mass market retailers. This was partially offset by higher sales of lawn and garden equipment to our dealers in the U.S. and increased sales in Brazil due to our acquisition of Branco in December of 2012.  Production levels in the products plants were also reduced to lower inventories resulting in lower absorption of fixed manufacturing costs in the near term. 

EDITOR'S NOTE: With respect to the decision to suspend the sale of lawn and garden equipment to mass retailers, Walmart actually began selling Snapper mowers, a Briggs & Stratton brand, this past February. (Read the story)

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