Saturday, April 13, 2024

victory wind-down puts POLARIS INTO THE RED

US powersports manufacturer Polaris Industries posted a £2.3m net loss in the first quarter of 2017, compared with a net profit of £60.2m in the same period last year, reports BDN financial editor Roger Willis.

Principal culprit, according to the company, was a wind-down costs burden engendered by the now-defunct Victory motorcycle brand. These costs amounted to £30.1m in additional operating expenses, plus £10.2m in impairment charges on an unspecified investment related to Victory.

Motorcycle segment sales revenue fell by 35.1% to £93.9m. The first quarter of 2016 had included a £36.2m contribution from Victory. The surviving Indian bike brand gained at both wholesale and retail levels, increasing over-900cc US bike market share. But Slingshot trikes were “negatively impacted” by low availability. Wholesale deliveries to dealers were delayed while technical faults — which had resulted in a mass recall — were addressed, in turn affecting retail sell-through.

However, quadbike and side-by-side ATVs plus snowmobiles produced a segment revenue increase of 2.3% to £565.4m. This was apparently achieved through improving model mix, because wholesale ATV shipments were admittedly flat and snowmobiles 3% down, against a background of ongoing North American consumer purchase decline.

Total Polaris revenue actually grew by 17.4% to £900.8m, thanks mainly to input from other divisions of the company. But operating profit plummeted by 72.7% to £16.5m due to the aforementioned woes.

Commenting on these figures, Polaris chief executive Scott Wine stuck to an upbeat stance: “While we reported an expected net loss for the quarter, adjusted earnings were slightly ahead of our expectations. We saw continued strong performance from Indian Motorcycle and our off-road vehicle business improved its performance in the face of heavy competitive activity and a sluggish powersports environment.”

As an indicator of the pressures on Polaris, it announced a factory closure one day before the quarterly results statement was released. The company’s ATV assembly plant in Milford, Iowa, is to shut with a loss of between 275 and 300 jobs after some workers have been transferred to other locations. The vacant premises are to become warehousing for its nearby Indian motorcycle plant in Spirit Lake, Iowa.


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