April 17th, 2024

Mild winter wreaks havoc on BRP snowmobile sales, as Ski-Doo maker cuts production

By Christopher Reynolds, The Canadian Press on March 28, 2024.

Guests of BRP's Club Ski-Doo check out the long-awaited 2020 Ski-Doo Summit X Monday Feb. 18, 2019 in Grapevine, Texas. THE CANADIAN PRESS/AP-Brandon Wade/AP Images for BRP

North America’s warmest winter on record put a chill on snowmobile sales at BRP Inc., which saw profits plummet last quarter as a result.

“I have been in the business for a long time and saw several challenging seasons. But it’s the first time that I’ve seen such difficult conditions,” said CEO José Boisjoli.

“For us, it’s a bad winter.”

The Ski-Doo maker plans to cut snowmobile production by 30 per cent this year due to the build-up of inventory languishing in retailers’ stockrooms across Canada and the United States.

Profits fell 48.5 per cent year-over-year in the three months ended Jan. 31, the Valcourt, Que.-based company reported.

BRP posted net income of $188.2 million for the quarter, down from $365.1 million a year earlier. Revenue fell to $2.69 billion from $3.08 billion the year before.

On an normalized basis, the company said it earned $2.46 per diluted share in its latest quarter compared with a normalized profit of $3.85 per diluted share a year earlier.

Seasonal product sales dropped by more than a quarter, “mainly on snowmobile due to unfavourable winter conditions,” the company said in its earnings release Thursday, dragging down total revenue 12.5 per cent.

Overstocked inventories also resulted from late shipments of seasonal products the previous year – caused by supply chain kinks – meaning dealers had less need to buy new ones from BRP last year, it said.

Nonetheless, Boisjoli remained upbeat about the treaded, two-ski machines – the original product of Bombardier Inc., from which BRP was spun off in 2003.

“We’ll bounce back after,” the chief executive said.

“The industry is quite stable. But it remains that we’re happy to be more diversified than 20 years ago,” he added, pointing to other product lines such as side-by-sides, an off-road vehicle that enjoyed high sales in the company’s fourth quarter.

The warmer weather may even be prompting earlier-than-usual purchases of those powersport products.

“Anecdotally, we’ve had some dealers say, ‘You know what, my snowmobile business has slowed down significantly in February, March, but consumers are walking in and buying [off-road vehicle] products instead,'” said chief financial officer Sébastien Martel.

Looking ahead, BRP forecast revenue of between $9.1 billion and $9.5 billion for this year, versus $10.37 billion in its 2024 financial year.

It predicted diluted earnings of $7.25 per share to $8.25 per share compared with $11.11 per share in the year just past.

While the forecast figures notched below analysts’ expectations, BRP shares rose $5.25 or six per cent to $91.58 in late-morning trading Tuesday.

The company also raised its dividend, saying it will now pay 21 cents per share each quarter, up from 18 cents per share.

This report by The Canadian Press was first published March 28, 2024.

Companies in this story: (TSX:DOO)

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