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WEAK RESULTS FOR POLARIS

Assuming that revelations of yet another all-time record annual revenue for US powersports manufacturer Polaris Industries — up by 5.3% to £3.29bn — heralded good news would sadly be a mistake. In fact, 2015 had been increasingly tough, as indicated by a lamentably thin operating profit up by just 0.2% to £500m and net profit rising by a puny 0.3% to £317.9m.

Full-year revenue from the company’s core off-road vehicle (ORV) sector — quadbike and side-by-side ATVs — plus snowmobiles was actually down by 0.9% to £2.59bn. Attrition was concentrated in the final three months of 2015, where ORV and snowmobile sales suddenly plummeted by 18% to £601.5m.

Overall fourth-quarter revenue fell by 13.3% to £771.5m. Operating profit dropped by 24.2% to £111.1m. Net profit was down by 18.3% to £77.2m. 

Polaris blamed this sharp decline on economic factors such as the strengthening US dollar and shrinking oil prices, combined with unseasonably warm winter weather drastically affecting its domestic market. To mitigate the consequences, it had already cut production during the period, thereby avoiding excessive dealer inventory, and laid off about 100 employees.

However, the burgeoning Polaris motorcycle business saved its corporate bacon. Total annual sales of Indian and Victory bikes plus Slingshot three-wheelers surged by 66.8% to £487.3m. In the final quarter, they were up by 33% to £113.4m. Indian’s cruiser range was largely responsible for that, abetted by a budget-priced Scout Sixty (pictured) launched into showrooms during the autumn, with help from Slingshot growth. Victory retail sales were reportedly less impressive, owing to low product availability.

Commenting on these results, Polaris chairman and chief executive Scott Wine admitted: “Our performance failed to meet our earlier projections, as both external and internal challenges restrained growth and profitability”, adding that he expected “another volatile year” in 2016.

In response, disgruntled investors promptly wiped a further 12% off the value of Polaris shares in heavy trading immediately after his announcement. Polaris stock has now fallen by more than 45% since last September, when investment analysts began to smell a rat about ongoing prosperity.

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