Briggs & Stratton shutting plants, to cut 767 jobs

AP News
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Posted: Jan 26, 2012 10:52 AM
Briggs & Stratton shutting plants, to cut 767 jobs

Engine maker Briggs & Stratton Corp. on Thursday said it will close a plant in Tennessee and shift the work to Georgia, eliminating about 690 jobs in the U.S., as it adjusts to a changing market for outdoor equipment.

The company is also closing a plant in the Czech Republic, which will result in 77 job cuts there. It is shifting that work to a Kentucky factory.

Its Poplar Bluff, Mo., engine plant will also reduce capacity further, after cutting back over the past year, but the company said it does not expect significant employment changes there.

The moves reflect sharp declines in demand for U.S. lawn and garden products. Briggs & Stratton said the market has declined more than 33 percent since 2004.

"This significant and prolonged market decline is unlike any other this industry has seen in decades," said CEO Todd Teske in a release. The actions "will better align our production capacity to the markets we serve."

The company's shares tumbled 9 percent in morning trading.

The Newbern, Tenn., facility, which manufacturers walk-behind lawn mowers and snow throwers for the U.S. market, will be closed by May 15. The Ostrava, Czech Republic facility, which makes small engines for outdoor power equipment, will end production by March 15.

The changes will save the company $18 million to $20 million a year before taxes, the company estimated. It said it will offer assistance programs, continued benefits and outplacement services for affected employees, where applicable.

The Milwaukee-based company announced the moves at the same time it posted a fiscal second-quarter profit, reversing a year-ago loss, despite lower sales.

For the three months ended Dec. 31, Briggs & Stratton said it earned $2.7 million, or 5 cents per share. In the year-earlier period, the company posted a net loss of $1.3 million, or 3 cents per share. On an adjusted basis, the company posted a profit of 6 cents per share in the 2010 period.

Revenue slipped a half percent to $447.9 million from $450.3 million.

Analysts, on average, were expecting profit of 4 cents per share, on revenue of $457.3 million, according to FactSet.

Engine sales fell 4 percent, mainly due to lower shipments in Europe. The company's product sales rose 16 percent due to increased sales of portable generators and snow equipment.

The company reduced operating costs, and its interest expenses dropped by 47 percent to $4.8 million for the quarter, reflecting a lighter debt load.

The plant closings and restructuring will result in $45 to $50 million in pre-tax charges in 2012. Including those costs, the company now expects its full-year profit to range between $28 million and $41 million, or 55 cents to 81 cents per share.

Excluding the charges, the company expects to earn between $1.15 and $1.35 per share for the full fiscal year.

Analysts, on average, were expecting profit of $1.28 per share, with estimate ranging from $1.20 to $1.39.

Briggs & Stratton expects fiscal 2012 sales to rise 4 to 6 over fiscal 2011, when sales reached $2.1 billion. That implies a revenue forecast between $2.19 billion and $2.24 billion for the fiscal year.

Wall Street has forecast revenue, on average, of $2.22 billion, with estimates ranging from $2.21 billion to $2.24 billion.

Shares dropped $1.56 to $15.64. The stock has changed hands between $12.36 and $24.18 in the past 52 weeks.