Analyst lifts rating on Brunswick to 'Outperform'

NEW YORK (AP) — Shares of recreational-boat maker Brunswick Corp. surged 7 percent Monday after a Wells Fargo Securities analyst said aggressive cost cutting and promotions appear to be largely behind the company.

Timothy Conder said that Brunswick, which also makes gym and bowling equipment as well as pool tables, should produce $420 million of annual operating cost savings by the end of 2009. He said the company's Mercury engine segment could produce an additional $25 million to $50 million of annualized operating savings by the end of 2011.

Sales at the marine-engine segment, which consists of the Mercury Marine Group, including the marine service, parts and accessories business, fell 29 percent to $363.5 million in the third quarter ended Oct. 3. International sales, which represented 41 percent of total segment sales in the quarter, declined by 27 percent.

Last month, Brunswick said that its Mercury's manufacturing facilities continued to cut production rates and take plant furloughs during the quarter in response to lower retail demand and to reduce pipeline levels.

Brunswick accelerated plans last year to close four boat manufacturing plants to "resize the company." It same at the time that it wanted to eliminate $300 million in costs by the endof 2009 and would eventually cut about 1,450 hourly and salaried positions.

Conder also said Brunswick has no material debt maturities until 2013. The company is also well positioned to take advantage of growing international economies in Europe, Canada, Asia, Latin America and Africa/Middle East more quickly than its competitors, he said. That should help Brunswick mitigate the effects of what will likely be a very gradual U.S. consumer recovery, he added.

The company's shares rose 67 cents to $10.15 in afternoon trading.