Briggs & Stratton Corp.
) has decided to narrow down its product focus at its Auburn,
Alabama plant. Instead of producing multiple products, the plant
will be producing V-twin (twin cylinder) engines used in riding
mowers to meet its soaring demand in the U.S.
BRIGGS & STRATT (BGG): Free Stock Analysis
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The demand for twin-cylinder is on the rise as more and more
American homeowners and commercial lawn service companies are
showing their preferences for zero-turn riding mowers and premium
lawn tractors. Accordingly, the facility at Auburn has increased
its production level to match the mounting demand for
In addition, the company has been manufacturing new products at its
Auburn facility. The products, including Professional Series and
Commercial Turf Series engines, meet the demand for both the
commercial and prosumer market segments.
The plant uses advanced Lean Six sigma methodology to produce
innovative and high quality products. Its stress is also on cost
saving initiatives which the company seeks to achieve by partnering
with Alabama Power to identify the energy saving opportunities.
The company's endeavors are aimed at cost reduction and geographic
expansion. Earlier, it had decided to shift the production of
horizontal shaft engines from the Auburn, Alabama plant to
Chongqing, China, or be sourced from third parties in Southeast
Briggs & Stratton reported fiscal 2012 adjusted earnings of
$1.15 per share missing the Zacks Consensus Estimate of $1.24.
Total revenues declined 2% year over year to $2 billion, failing to
meet company's expectation of a growth in the range of 2% to
Recently, the company hiked its quarterly dividend by 9% to 12
cents, thereby increasing value to the shareholders. The increased
dividend will be payable on October 1, 2012, to stockholders of
record as of August 20, 2012.
The current drought conditions in North America and soft demand
conditions in Europe are expected to hinder the company's
performance moving forward. The soft housing market in the U.S.
would add to the woe.
Briggs & Stratton retains a short-term Zacks #3 Rank (Hold). We
have a long-term Neutral recommendation on the stock.