Winnebago Industries Inc. reported a sharp decline in fourth quarter and year-end earnings, impacted by higher interest rates and fuel costs resulting in diminished demand for the company’s motorhomes.
The Forest City, Iowa, builder also cited a “significant shift” toward lower-priced products and said it expects continued softness in the market throughout the first and second quarters despite the recent decline in fuel prices and pause in interest rate hikes by the Federal Reserve.
For the quarter, ended Aug. 26, net income fell to $9.3 million from $15.4 million a year ago. Winnebago said the results included a gain of $924,000 related to the liquidation of inventory. The gain was offset by a claims-related charge of $1.2 million and a charge of $717,000 for stock-based compensation costs.
Sales in the quarter were down 11% to $205.4 million from $231.5 million last year.
For fiscal 2006, earnings dropped 31% to $44.7 million from $65.1 million the previous year while sales declined 13% to $864.4 million from $992 million.
“We were encouraged with our financial performance during fiscal 2006, particularly in light of such challenging market conditions,” said Winnebago Chairman and CEO Bruce Hertzke. “While negative economic factors, including rising interest rates, record fuel prices and declining consumer confidence created a very difficult market for the motor home industry, we remained solidly profitable.”
Hertzke said the introduction of the Sprinter chassis-based Winnebago View and Itasca Navion Class C performed well and helped the builder gain market share in the Class C sector.
“The innovative, fuel-efficient Winnebago View and Itasca Navion Class C diesel motor homes have continued to sell extremely well in the marketplace,” continued Hertzke. “As a result, the View and Navion have helped us achieve a significant increase in our Class C market share, capturing 25.1% of the Class C retail market for the first eight months of calendar 2006, compared to 19.3% for the same period a year ago, according to independent survey firm Statistical Surveys Inc.”