* Q4 net profit falls 29 pct
* Motor home shipments decline 6.5 pct
* Backlog, inventory also down
* Company considering price reductions in 2012 - CEO
By A. Ananthalakshmi and Lynn Adler
Oct 13 Winnebago Industries Inc's profit
topped Wall Street estimates, but hopes of a nascent recovery in
the recreational vehicle industry earlier this year skidded as
the largest U.S. motor home maker warned of ebbing consumer
Shares of the company, known for its large, luxurious
touring buses that provide home-like comfort on the road, rose
as much as 11 percent to $8.50 in early trading, but pared most
of those gains to trade up 1 percent.
"While we experienced improved market conditions in the
first half of fiscal 2011, we were disappointed to see the
negative effects caused by falling consumer confidence
throughout the remainder of the year," CEO Randy Potts said in a
Sales of Winnebago's motor homes, which can sell for as much
as $300,000, are heavily dependent on discretionary spending by
consumers. A fragile economy and slow jobs growth have dampened
consumer confidence in recent months.
Forest City, Iowa-based Winnebago, which sells its motor
homes under the Winnebago, Itasca and ERA brands, said motor
home deliveries during the quarter fell 6.5 percent to 1,088
units. Dealer inventory slipped 4.2 percent.
Backlog at quarter-end fell 10 percent to $74.7 million,
suggesting demand was weak for the company's motor homes, some
of which include beds, kitchens, toilets and showers.
In September, U.S. consumer confidence dropped to near
2-1/2-year lows, pointing to weak spending in the months ahead.
Speaking to Reuters, CEO Potts said the industry had a sense
of optimism in the most recent spring.
"Things were starting to look better. Everybody in
the RV industry, all the way down to the dealer level, was
hoping this was going to be beginning of a bigger change, and it
just didn't develop," Potts said.
"Now it's time to get through the fall season, which is
always a tougher time of year from a wholesale perspective."
For years, the company has been hit by the global
recession and tight credit markets. Its shares have lost almost
64 percent since the financial crisis hit consumer spending on
Winnebago's most recent fourth-quarter net income
fell to $3.5 million, or 12 cents a share, from $4.9 million, or
17 cents a share, a year ago.
Revenue rose 6 percent to $130.5 million due to price
Analysts were expecting a profit of 4 cents a share on
revenue of $116.8 million, according to Thomson Reuters I/B/E/S.
But Potts said the company was considering price
reductions on certain models for 2012.
"Our expectation as a result of that would be increased
volume," he said.
Potts said the company was working toward diversification,
looking for opportunities to grow the business. He declined to
specify further. A spokeswoman later clarified that the company
was also open to opportunities outside of the motor home
Last month, Winnebago's rival Thor Industries Inc
posted a better-than-expected quarterly profit but said
sales of motor homes fell 10 percent.
Winnebago also competes with Navistar International's
Monaco brand of RVs.
RV shipments in 2011 are expected to total 247,500 units, up
2.1 percent, according to a forecast by industry analyst and
director of consumer surveys at the University of Michigan,
Curtin said RV sales are expected to face continued
challenges because of slow growth in jobs, incomes and credit
market, and continued weakness in the housing market.
Shipments are expected to fall 2 percent in 2012
to 242,400 units, according to Curtin.