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BGG to Temporarily Shut Plant

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In order to trim down the inventory levels of lawn and garden products manufactured at its McDonough, Georgia plant, Briggs & Stratton Corporation ( BGG) have decided to shut down production temporarily. The decision came in the wake of weak demand conditions for lawn and garden equipment in the U.S. as the market was hard hit by severe drought recently.


Per the decision, production at the facility will be closed from October 29 to November 25, this year. The company, however, will dispatch its products and services to customers during the period. 


Briggs & Stratton have been trimming down its production capacity, challenged by the lack of demand for lawn and garden equipment. Lawn and garden market in the U.S. has declined more than 33% since 2004.


Earlier in January, Briggs & Stratton closed down production at its Newbern, Tennessee facility and Ostrava, Czech Republic, plant. Moreover, the company also decided to reduce capacity at its Poplar Bluff, Missouri, facility either by reconfiguring or by idling certain assets.


Briggs & Stratton, in April, announced several strategic actions to reduce cost and over-capacity. Accordingly, the company decided to narrow down its product focus at its Auburn, Alabama, plant and produce only V-twin (twin cylinder) engines used in riding mowers. 


Briggs & Stratton reported fiscal 2012 adjusted earnings of $1.15 per share, missing the Zacks Consensus Estimate of $1.24. Total revenues dropped 2% year over year to $2 billion, failing to meet the company’s expectation of a growth in the range of 2% to 4%. 


Recently, the company hiked its quarterly dividend by 9% to 12 cents, thereby increasing value to shareholders. The increased dividend will be payable on October 1, 2012, to stockholders of record as of August 20, 2012.


Based in Milwaukee, Wisconsin, Briggs & Stratton is the world's largest producer of gasoline engines for outdoor power equipment. Its wholly owned subsidiary, Briggs & Stratton Power Products Group LLC, is North America's number one manufacturer of portable generators and pressure washers, and is a leading designer, manufacturer and marketer of standby generators, along with lawn, garden and turf care products through its popular brands.


Briggs & Stratton retains a short-term Zacks #3 Rank (Hold). We have a long-term Neutral recommendation on the stock.

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