Brunswick Corp., the world’s largest maker of boat engines and pleasure boats, announced late Tuesday that it selected a new chairman and chief executive and is selling its bicycle, camping and fishing businesses.
The Lake Forest-based company’s board on Monday elected George Buckley, 53, as its chief executive, effective immediately. He had been president and chief operating officer, and head of Brunswick’s largest unit, the Mercury Marine Group.
Buckley replaces Peter Larson, 61, who retired unexpectedly. He had been chairman and CEO since 1995.
“Brunswick stands to benefit enormously from the exceptional operating skills and strong international business experience that he brings to his new roles,” Larson said in a Brunswick release.
For Brunswick, the moves are part of a continuing shift: After a series of acquisitions in the mid- to late 1990s, it has sought to improve its focus and profitability, in part through consolidation and outsourcing.
Buckley said Brunswick’s bicycle, camping and fishing units–which represent about 11 percent of the company’s $4.3 billion in sales–are being divested because their profit margins are lower than those of the company’s other businesses.
The company said it will report after-tax charges of about $190 million in the second quarter related to the discontinued operations.
Brunswick has had a bumpy earnings record in recent years. In 1999, it had net income of $37.9 million, a drop of 80 percent from 1998’s $186.3 million. Much of the decline came from $185.5 million in charges from a restructuring of the bicycle unit and charges related to litigation.
Tuesday’s announcement came after the close of regular New York Stock Exchange trading. Brunswick shares lost 6 cents, to $16.69.
Shares are trading at nearly half their prices of last summer, partially because of earnings problems and partly because of the company’s legal battles.
In March, an Arkansas appeals court reversed a $133 million antitrust judgment against Brunswick. The decision stemmed from a 1995 lawsuit by the Independent Boat Builders Inc., a buying consortium that accused the company of monopolizing the boat engine market and overcharging customers. But last year, it took $71.5 million in after-tax charges for settlement of several suits related to the Arkansas case.
Buckley said Tuesday that it’s important for the company to get back to basics.
“We have outsourced production, consolidated operations and reduced headcount. These actions have not been sufficient to outweigh the effect of continued pricing pressure from low-cost Asian imports and weak market conditions,” he said in an interview.
In January, Brunswick said it would follow other bicycle manufacturers to China and close facilities in Olney, Ill., and Mexico, eliminating more than 1,000 jobs and reducing employment in the company’s bicycle division by 80 percent. Its bicycle brands include Mongoose and Roadmaster.
Other brands being divested include American Camper, Zebco and Quantum.
Brunswick is keeping its boat engine and pleasure boat businesses, which in 1999 generated $3.1 billion in sales, or about 72 percent of the company’s total sales. Brands include Sea Ray and Bayliner.
Brunswick also will keep its life fitness exercise equipment unit and its bowling and billiards businesses. In addition to selling bowling equipment, the company owns about 120 bowling centers nationwide.
Brunswick Billiards is the oldest division of Brunswick Corp. It was established in 1845, when John Brunswick built one of the country’s first billiard tables, and the unit now markets products in more than 60 countries.
The company’s board hopes Buckley will bring the impressive results he produced at Mercury Marine to Brunswick’s remaining businesses. During his three-year tenure, Mercury Marine sales increased 14 percent and operating earnings grew 31 percent.
“It’s not rocket science,” Buckley said, listing several areas he considers important to running a company, including strict financial controls, disciplined planning processes, building great relationships with customers and instilling a culture that focuses on winning.
He said Brunswick has solid businesses but could improve in all those areas.
“We have a good management team,” he said Tuesday, adding that it is “too early to tell” whether there will be further management changes.
Regarding other changes he might make, Buckley said, “I’ve had this job since about 9 o’clock last night, so I probably don’t want to go any further right now.”
