Upfront: Good news heading into the spring

By Steve Noe

The outlook for the lawn, golf and turf equipment industries is “increasingly positive,” according to a quarterly Industry Research Update recently released by GE Capital, Americas.

“From a macro point of view, general economic and consumer indicators are steadily improving, though from weak levels,” said Serena Tse, a senior vice president and industry research manager with GE Capital. “Due to the mild winter weather in the Northeast, inventory turns have accelerated and financing volume is growing.”

According to GE Capital’s Industry Research Update, key developments include:

Economic indicators improved slightly in fourth quarter 2011, staving off the possibility of a double-dip recession, which could adversely affect the housing industry, consumer discretionary income and the golf industry.
Consumer sentiment ended 2011 improved off August lows, but the fourth quarter 2011 average was down -8.8 percent from a year ago.
2011 was another difficult year in the housing industry, but quarterly trends seem to be improving.
Golf rounds played improved in November 2011 (+1.7 percent Year over Year [YoY]) and December 2011 (+32.9 percent YoY) due to unseasonably warm weather, but declined -2.5 percent YoY in 2011.
Median gross revenue per facility increased +5.4 percent YoY in fourth quarter 2011 and +1.4 percent YoY in 2011. Strength in merchandise sales (+4.6 percent YoY) and food and beverage sales (+2.5 percent YoY) were offset by declines in golf fees (-0.5 percent YoY).

A closer look inside the numbers revealed more positive news.

After a difficult middle of 2011, unit sales of compact tractors (under 40 horsepower) improved +7.5 percent YoY in the fourth quarter with increases over 2010 and 2009. In 2011, unit sales of compact tractors increased +0.8 percent YoY. Year-end inventories stood at 8.9 months, which was an improvement from 9.8 months in fourth quarter 2010.

On the housing front, total housing starts increased a whopping +22.6 percent YoY in the fourth quarter of 2011. Housing starts improved +3.2 percent YoY to 605.4 million in 2011 following a 6-percent YoY increase in 2010. Housing economists predict more good news is on the way with housing starts expected to rise +14.6 percent to 685 million in 2012 and another +31.8 percent to 902 million in 2013. Existing home sales rose +7.5 percent YoY in fourth quarter 2011 and +1.7 percent YoY in 2011.

Single-family housing starts increased slightly +2.4 percent YoY in fourth quarter 2011. In 2011, single-family housing starts declined -9.2 percent YoY to 427.7 million after increasing +5.9 percent YoY in 2010. However, once again housing economists believe good news lies just around the corner with single-family housing starts expected to improve +11.3 percent YoY to 471 million in 2012 and another +33.6 percent to 630 million in 2013. Regionally, the Northeast and Midwest are faring better than the South and West. In fourth quarter 2011, single-family housing starts increased +25.4 percent YoY in the Northeast and +13.3 percent YoY in the Midwest, while they declined -0.1 percent YoY in the South and -1.1 percent YoY in the West.

For more information, you can find the full Lawn, Golf & Turf Equipment Industry Research Update at www.gelending.com/CDF/DealerExclusiveNewsletter_02-2012/docs/Golf_Turf_Update_1Q12.pdf.

OPE Editor Steve Noe
snoe@m2media360.com