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POLARIS: IN RECOVERY MODE

Although its 2022 year-to-date bottom line is still pretty awful, US off-road vehicle (ORV) and motorcycle manufacturing giant Polaris Industries enjoyed a much stronger third quarter as supply-chain bottlenecks were gradually eliminated. BDN financial editor Roger Willis reports.

For the nine months to the end of September, total revenue has risen by 11.6% to £5.346bn. Associated operating profit almost reached parity with the same period in 2021, just 0.8% down at £473.1m. But net profit nevertheless plunged by 38.2% to £217.6m. A considerable proportion of this decline was attributable to income streams drying up, in relation to the disposal of certain company divisions.

However, within the latter part of that, Q3 was an altogether more attractive proposition. Three-monthly revenue rocketed, 31.7% up to £2.018bn. Operating profit surged by 60.7% to £219.1m. Net profit was 62.6% higher at £160.7m.

As usual, the large proportion of quarterly turnover from ORVs — including quadbikes and snowmobiles — was a key factor, soaring by 32.6% by £1.509bn. Principal driving force was accelerated production and wholesale shipments, thanks to a concerted effort to tackle supply-chain woes. Higher prices chasing the US inflationary spiral also played a significant role. 

However, the company admitted that its North American ORV retail sales in Q3 were about 10% down (a “high single-digit percentage” in secretive Polaris corporate gibberish). Inevitably, those inflation-proofed price increases had softened demand as they fed through from dealers to consumers.

The smaller on-road segment, encompassing Indian motorcycle and Slingshot trike brands, did better overall. Revenue rose by 29.5% to £288.9m, bolstered by “sequential improvement in component availability” increasing wholesale shipments, against a background of stable demand —  in this case despite higher prices. Q3 retail sales of Indian motorcycles in North America actually grew by around 10%, even though unit sales of comparable domestic market products in total fell by “a low single-digit percentage”.

Commenting on the company’s progress, Polaris chief executive Mike Speetzen boasted: “Easing supply-chain headwinds enabled us to increase shipment volumes and take advantage of  our strong pricing strategy, resulting in record quarterly sales. Looking forward, our diverse portfolio, commitment to innovation and strong financial position give me incredible confidence in our ability to deliver long-term profitable growth and shareholder value.”

$-£ currency translation at forex rates applicable on 26 October 2022    

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