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BRP delivering Ski-Doos earlier this year to reduce dealer bottlenecks

MONTREAL – The maker of Ski-Doo snowmobiles is delivering inventory to dealers a couple of weeks earlier this season to ensure customers have their products well ahead of the first snowfall, in what could be a more challenging winter market.

Dealers wanted earlier deliveries to better accommodate their buyers who placed orders last spring, BRP chief executive Jose Boisjoli said Friday during a conference call about its second-quarter financial results.

“We shipped earlier to help the dealer not to have the bottleneck in the shop,” Boisjoli said.

BRP (TSX:DOO) expects global snowmobile sales will be down a little this coming season as ongoing challenges in Russia and a weak Alberta economy more than offset strength in the United States and Western Europe.

Ski-Doo orders from Western Canadian dealers were significantly lower in the second quarter, contributing to a 20 to 25 per cent reduction in overall sales from the oil producing region in the second quarter.

The rest of Canada was “flattish” for a 10 per cent reduction in Canadian sales, Boisjoli told analysts.

The Quebec-based company, formerly part of Bombardier Inc. (TSX:BBD.B), said dealer inventories are 12 per cent higher than at this time last year.

North American shipments from BRP (TSX:DOO) will continue through October and November for orders placed last spring. Deliveries through January will fulfil later orders.

BRP beat analyst expectations even though its net loss surged to $68.3 million from $3.6 million a year ago due to a $71.6 million foreign exchange loss on its long-term debt.

Excluding one-time items, it earned $4 million or three cents per share in adjusted profits, compared to a loss of $8.8 million or seven cents per share.

Revenues grew 4.1 per cent to $812 million from $780 million, mainly due to currency fluctuations, offset by lower sales of year-round products such as Can-Am ATVs and seasonal watercraft products, such as the Sea-Doos.

BRP was expected to lose two cents per share on $787 million of revenues, according to analysts polled by Thomson Reuters.

Although the global economy is uncertain, the company said the U.S. market is solid and Europe performed better than expected despite weakness in Russia.

In Brazil, sales of lower priced products, including the Spark personal water craft, were hurt by a 35 per cent devaluation of the currency which forced it to increase prices by 20 to 25 per cent. But sales of higher priced products have held up.

“We see some slowdown on the entry-level product but continued retail on the high-end because rich people can afford product despite the real (currency’s) devaluation.”

Boisjoli said the Spark is doing well in North America and has traction in emerging markets.

Two years after entering the market, the lower priced Sea-Doo is attracting new customers and helping the market to grow.

“Spark is re-energizing the industry,” Boisjoli added.