UPDATE 4-Brunswick profit tops Street view, shares up

* Q2 net EPS 15 cents vs Street view loss 2 cents

* Sales up 41 pct to $1.015 bln, topping view

* Will sell Triton unit; terms not disclosed

* Shares up more than 12 percent (Adds comments from call; background on plant closings; details on discounts, inventory and prices; updates shares)

By James B. Kelleher

CHICAGO, July 29 (Reuters) - Brunswick Corp (BC.N), the world's largest maker of pleasure boats, reported stronger-than-expected quarterly results on Thursday, lifted by increased shipments to dealers and operational efficiencies tied to its ongoing restructuring.

The results, including the company's first reported profit in more than two years, and a separate announcement that it is divesting its Triton fiberglass boat unit sent Brunswick's shares up nearly 20 percent in early trading, though they later gave up nearly half those gains.

Tim Conder, an analyst at Wells Fargo, attributed at least some of the share gain to short-covering, noting that as of mid-July, short interest in Brunswick shares constituted about 19.3 percent of the company's total float.

But investors were also cheered by signs that Brunswick's aggressive consolidation of its manufacturing operations is bearing fruit. The company, which has shuttered 17 of its 28 plants over the past few years, posted an operating margin of nearly 8 percent in the quarter -- its best showing in four years.

DEALER STOCKING

It acknowledged that the improved numbers were largely driven by a pickup in showroom stocking by optimistic dealers -- not a rise in end-demand by boat buyers.

While that wholesale-driven upturn has been a common theme in recent reports from other makers of hyper-discretionary recreational vehicles, including motorhome maker Winnebago Industries Inc (WGO.N), it raises the question of how sustainable the rebound will be.

While sales to dealers provide real revenue -- Brunswick, like Winnebago, does not directly sell to consumers -- those dealers are likely to curtail that inventory replenishment should consumers not start showing up.

Recent economic reports suggest the industry still faces big challenges on that front. A government report earlier this week showed that job worries drove July U.S. consumer confidence to its lowest since February, with one in six people expecting lower income in the next six months, underscoring the precarious state of economic recovery.

Brunswick said that nervousness means dealers are being forced to continue to discount boats to get consumers to buy -- especially older model boats. It said that level of aged product, while reduced, remains "higher than desired levels" and discounting means average selling prices are continuing to drop.

Also contributing the lower selling prices: The consumers who are returning to showrooms tend to be buying cheaper boats -- a sign, the company said, of lingering nervousness among high net worth buyers.

"Although the lower priced aluminum boats have begun to show signs of stability," Dusty McCoy, the company's chief executive said on a conference call, "higher-priced fiberglass boats have yet to experience any significant improvements."

FIRST PROFIT IN TWO YEARS

Brunswick -- which makes boats sold under more than a dozen brand names, including Bayliner, Hatteras and Sea Ray, as well as Mercury and Mariner brand boat engines -- posted a second-quarter net profit of $13.7 million, or 15 cents a share, compared with a loss of $163.70 million, or $1.85 a share, during the comparable quarter last year.

It was the company's first reported net profit since the first quarter of 2008.

Analysts on average had expected the Lake Forest, Illinois-based company to report a net loss of 2 cents a share, according to Thomson Reuters I/B/E/S.

Sales at the company, which also makes fitness machines and bowling and billiards equipment, rose 41 percent to $1.015 billion.

Analysts had expected sales of $960.25 million.

Stripping out costs associated with the company's ongoing restructuring and a one-time tax item, Brunswick said it made about 43 cents a share in the quarter. On that basis, analysts on average had expected a profit of 2 cents a share.

In afternoon trading, Brunswick shares were up 12.1 percent at $16.33, but were off the earlier intraday high of $17.45 and the 52-week high of $22.89 they touched in April. (Reporting by James B. Kelleher; editing by Gerald E. McCormick, Leslie Gevirtz)