Recovering from a particularly grim year in 2021, when output was severely hindered by supply-chain issues which suggested an over-reliance on Chinese component sourcing, US powersports manufacturer Polaris Industries has delivered a much stronger performance in 2022 — although chief executive Mike Speetzen admits supply challenges haven’t gone away. BDN financial editor Roger Willis reports.
Annual revenue improved by 15.5% to a record £7.128bn. Operating profit was 13% up to £667.7m. An initial statement of net profit from continuing operations highlighted a 21.5% increase to £500.9m. But after adjustment for losses and impairment relating to the disposal of two business units, net profit actually fell by 9.5% to £371.3m.
Final-quarter figures positively glowed, reflecting just how bad the same period 12 months previously had been. Turnover in Q4 climbed by 20.7% to £2.005bn. Operating profit stacked on 60.7% to £214.3m. And without the necessity to make a contribution to the aforementioned impairment earlier in the year, plus the ongoing restoration of dealer inventory through rising wholesale shipments, quarterly net profit more than doubled — 125.2% up to £163.2m.
The core Polaris off-road vehicle (ORV) segment covering side-by-side and quadbike products was inevitably responsible for the lion’s share of Q4 revenue, rising by 19.1% to £1.551bn. The much smaller on-road segment, led by Indian Motorcycle but also including Slingshot trikes, achieved better growth, 29.4% up to £252.2m.
Abstemious as ever about providing detailed hard data, Polaris swerved around the fact that its North American wholesale performance had outstripped Q4 retail sales. Despite improving performance in utility ORVs and Indian Motorcycle, softness in recreational ORV demand had apparently reduced dealer deliveries to customers.
While Indian Motorcycle retail had increased by a “low single-digit percentage”, bucking comparable North American bike industry “mid-single-digit percentage” retail volume decline, overall Polaris ORV retail was also down by a “mid-single-digit percentage”.
“Looking ahead, we see significant opportunity for success supported by a strong pipeline of new products and continued supply chain improvement,” commented chief executive Mike Speetzen. “Although macroeconomic headwinds may persist in 2023, our team remains agile and poised to deliver industry-leading innovation that is consistent with the Polaris brand.” Nevertheless, he only expects 2023 turnover to be somwhere between flat and 5% up at best versus 2022.
$-£ currency translation at forex rates applicable on 7 February.