Briggs & Stratton Corp.
) announced a 9% (1 cent) hike in its quarterly dividend to 12
cents. The increased dividend will be paid on October 1, 2012, to
stockholders of record as of August 20, 2012.
The dividend hike is expected to be well received by the
shareholders as the company increased the dividend payout after a
hiatus of three years. Back in 2009, the company had halved its
dividend to the current level of 11 cents in order to preserve cash
during the recession.
Briggs & Stratton reported adjusted net income per share of 99
cents in the third quarter of 2012 compared with $1.02 per share in
the year-ago quarter. Sales for the quarter dipped 0.3% year over
year to $720.1 million, from the year-ago quarter due to weaker
sales in Europe arising from the uncertain economic environment,
which has impacted consumer spending. At the end of the third
quarter, Briggs & Stratton had cash and cash equivalents of
The soft housing market in the U.S. and lower demand in Europe have
taken its toll on the company's results. Since 2004, the U.S. lawn
and garden market has declined over 33%. The company has been
taking steps to reconfigure and reduce its capacity and costs,
diversify its portfolio and expand in other regions of the world.
The company also announced further cost reduction initiatives in
the third quarter.
Among other initiatives, production facility of horizontal shaft
engines will be shifted from Auburn, Alabama to its existing
production facility in Chongqing, China or sourced from third
parties in Southeast Asia. The company had previously shifted
smaller horizontal shaft engines to the Chongqing plant in 2007
where these types of engines can be manufactured more
Portable generators will be continued to be manufactured in
Auburn this year and the company is evaluating alternatives with
respect to manufacturing, assembling or sourcing cost effective
portable generators beyond 2012. The company also intends to reduce
its headcount by approximately 10% in fiscal 2012.
Earlier in January 2012, the company had announced its plans to
reduce manufacturing capacity by closing its Newbern, Tennessee and
Ostrava, Czech Republic plants as well as the reconfigure its plant
in Poplar Bluff, Missouri. The total pre-tax costs of these actions
are expected to be $60 to $70 million, of which approximately $45
to $50 million of total charges will be recognized in fiscal
The company anticipates annualized pre-tax savings from these
restructuring actions to be $30 to $35 million in fiscal 2013 and
$40 to $45 million in fiscal 2014.
For fiscal 2012, the company expects adjusted net income in the
range of $58 million to $68 million, or $1.15 to $1.35 per
share. Net sales for fiscal 2012 are expected to grow by 2%
to 4%, depending on the level of recovery of consumer sales of lawn
and garden equipment in the U.S. The Zacks Consensus Estimate
is currently pegged at $1.24 for fiscal 2012 and at 28 cents for
the fourth quarter.
Milwaukee, Wisconsin-based Briggs & Stratton is the world's
largest producer of gasoline engines for outdoor power equipment.
Its wholly owned subsidiary Briggs & Stratton Power Products
Group, LLC is a top manufacturer of portable generators and
pressure washers, and is a leading designer, manufacturer and
marketer of lawn and garden and turf care through its Simplicity,
Snapper, FerrisMurray and Victa brands.
Briggs & Stratton competes with
Honda Motor Co., Ltd.
Kawasaki Heavy Industries Ltd.
). Briggs & Stratton retains a short-term Zacks #3 Rank
BRIGGS & STRATT (BGG): Free Stock Analysis
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