Briggs & Stratton announced lower second quarter net income of $3 million versus $3.2 million a year ago. Sales for the outdoor appliance and engine manufacturer also declined.
The company reported second quarter fiscal 2010 consolidated net sales of $393.0 million and consolidated net income of $3.0 million or $0.06 per diluted share. The second quarter of fiscal 2009 had consolidated net sales of $477.5 million and consolidated net income of $3.2 million or $0.06 per diluted share. Consolidated net sales decreased $84.5 million between years, with both Power Products and Engine segments experiencing lower sales, primarily the result of lower unit volumes. Consolidated net income was fairly consistent between years despite the sales decline. This result reflects better margins caused by lower manufacturing costs and lower engineering, selling, general, and administrative costs.
For the first 6 months of fiscal 2010, the company had consolidated net sales of $717.7 million and a consolidated net loss of $5.7 million or $0.12 per diluted share. For the same period a year ago, consolidated net sales were $935.6 million and consolidated net income was $1.2 million or $0.02 per diluted share. The decrease in the first 6 months' consolidated net sales of $217.9 million was attributable to both reporting segments experiencing lower sales, primarily the result of lower unit volumes.
For Power Products, fiscal 2010 second-quarter net sales were $156.6 million, a $35.4 million decrease from the $192.0 million in the same period a year ago. The lower net sales were primarily the result of a decrease in shipments of portable generators. Replenishment demand that occurred because of major weather events last year was not required in the current year due to a lack of weather events. In general, all lawn and garden product volumes were less than those in the same period a year ago, except for stronger snow thrower shipments. All levels of the lawn and garden distribution channel appear to be managing to lower inventory levels ahead of the spring of 2010 retail season.
Net sales of Power Products for the first 6 months of fiscal 2010 were $320.2 million, a $127.4 million decrease over the same period a year ago. The sales decline was primarily the result of a decrease in sales of portable generators due to no hurricanes making landfall in the United States in the first half of fiscal 2010. Other than a small increase in pressure washer shipments, the other product offerings in this reporting segment had volume declines between years.
The loss from Power Products operations for the second quarter of fiscal 2010 was $4.5 million, an improvement of $4.1 million over the loss for the same period a year ago. The improvement in the loss from operations for the quarter was the result of lower manufacturing costs, primarily related to lower commodity costs and planned cost saving initiatives. These improvements were partially offset by lower sales, lower production volumes and $1.7 million of expenses associated with the previously announced closing of the Jefferson, Wisconsin manufacturing facility.
The loss from Power Products operations for the first 6 months of fiscal 2010 was $0.9 million, a $5.1 million improvement over the loss from operations for the same period a year ago. The improvement in the loss from operations between years resulted from the same factors as described for the quarter and was also offset year to date by an unfavorable mix of lawn and garden product shipments. Through the first 6 months of fiscal 2010, costs related to the closure of the Jefferson, Wisconsin facility were $3.1 million.
The company continues to project that fiscal 2010 net income will be in the range of $40 to $50 million or $0.80 to $1.01 per diluted share. Consolidated net sales are projected to be approximately 6% lower between years primarily due to the absence of hurricane-related sales of portable generators, selected price reductions to reflect projected lower commodity costs, and lower engine shipments to Europe for lawn and garden applications.
Production levels for substantially all products are planned to be lower in fiscal 2010 to decrease the company’s investment in working capital. Operating income margins are projected to be in the range of 4.0% to 5.0%, and interest expense and other income are forecasted at $27 million and $5 million, respectively. The effective tax rate for the full year is projected to be in a range of 31% to 34%.
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