Gasoline engines manufacturer Briggs Stratton Corp. (BGG) Thursday reported a slight decline in net income for the second quarter, which met estimates, on lower revenues mainly due to reduced unit volumes. Looking ahead to fiscal 2010, the company reaffirmed its earnings forecast, while expects revenues to decline by 6%. Briggs Stratton shares are currently trading down nearly 7% on the New York Stock Exchange.
Consolidated net income for the quarter was $3 million, down from $3.2 million in the previous year. On a per share basis, earnings were $0.06 per share, in line with the prior year. The company noted that consolidated net income was fairly consistent between years, despite lower sales, helped by better margins due to lower manufacturing costs and lower engineering, selling, general and administrative costs.
On average, seven analysts polled by Thomson Reuters expected the company to report earnings of $0.06 per share for the quarter. Analysts' estimates typically exclude special items.
Consolidated net sales declined to $393 million from $477.5 million in the prior-year quarter, mainly due to lower unit volumes. Six analysts estimated revenues of $429.84 million for the quarter.
Segment-wise, net sales at engines division declined 19% to $274.3 million from $339.3 million in the same period a year ago, primarily due to a 15% decrease in engine unit shipments. Power Products division's net sales were $156.6 million, down from $192 million in the prior year, impacted primarily by a decrease in shipments of portable generator product.
Engineering, selling, general and administrative expenses declined to $60.34 million from $63.30 million in the comparable quarter. For the six month period, consolidated net loss was $5.7 million or $0.12 per share, compared with a consolidated net income of $1.2 million or $0.02 per share. Year-to-date, consolidated net sales was $717.7 million, significantly down from $935.6 million in the comparable period.
Looking ahead, the company reaffirmed fiscal 2010 earnings forecast to be in the range of $40 to $50 million or $0.80 to $1.01 per share. Consolidated net sales are projected to be about 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.
Analysts currently expects the company to report earnings of $0.97 per share, on revenues of $1.97 billion for fiscal 2010.
Briggs Stratton added that production levels for substantially all products are planned to be lower in fiscal 2010 to decrease its investment in working capital. The company expects operating income margins to be in the range of 4% to 5%, and interest expense and other income are estimated at $27 million and $5 million, respectively. The company also anticipates effective tax rate for the full year to be in a range of 31% to 34%.
BGG is currently trading at $18.30 per share, down 6.54%, on the New York Stock Exchange.
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