Brunswick is not a well-known global brand, however, it is the owner of many such as Mercury outboards, Bayliner, Sea Ray and Boston Whaler boats, and more recently, the Freedom Boat club, now with over 600 locations around the globe. They’re the world’s largest marine company and have been in the International Equities Portfolio since April of 2021; unfortunately, they haven’t added to returns, and we’re down ~11% on the position.
They report earnings tomorrow night in the US (before market) with consensus expecting $US152m net profit for the December quarter on revenue of $US1.43bn. Worth noting, this is not a growth company, with the market expecting flat year-on-year growth for most metrics, however, it’s priced accordingly, on an Est PE of 9.16x.
However, from a portfolio perspective, we are looking to reduce risk and one aspect we need to be conscious of is sector exposure. At this point in the cycle, our view is we are too heavily exposed to the consumer in this portfolio, believing the lag effects of higher interest rates will have an impact on sales of recreational marine products at some point.
- We are looking to sell Brunswick (BC US) from the portfolio, pending this quarterly result
