BRP anticipates another strong year after posting record results despite weather

MONTREAL – Recreation vehicle manufacturer BRP Inc. (TSX:DOO) is forecasting another good year after generating record adjusted profits in fiscal 2016 despite a mild winter, a weak economy in Western Canada and a strong U.S. dollar.

The maker of Ski-Doo personal watercraft, Ski-Doo and Lynx snowmobiles and the Can-Am line of on-road vehicles, earned $200.8 million in normalized profits last year as revenues rose 8.6 per cent to $3.8 billion.

Including one-time charges, net income decreased to $51.6 million from $70.1 million.

The Quebec-based company said it expects revenues with grow between four and eight per cent in fiscal 2017, helped by the launch of new products, particularly side-by-side on-road vehicles.

“We feel we are in a good position to face the uncertain economic environment,” CEO Jose Boisjoli said Friday during a conference call.

While Western Europe, Scandinavia and Asia Pacific remain strong, Western Canada, Latin America and Russia remain a challenge and the U.S. is very competitive, he told analysts.

Retail sales in Canada decreased by four per cent to $700 million last year as the industry was hurt by a weak economy in Western Canada.

BRP said Ski-Doo gained market share even though retail sales for snow machines were down as a result of a mild winter in North America. Industry sales decreased by up to about nine per cent while sales in Western Canada were off by about 25 per cent.

Boisjoli said the company grew its Can-Am brand by entering the side-by-side market with its Defender model, and plans to introduce a new offering every six months for the next four years.

The company capped the year by posting a $28.7-million net loss in the fourth quarter, compared with $8.5 million profit a year earlier.

The rising value of the American dollar ate away at the profit by triggering a $70.3-million, non-cash writedown of its outboard motor business.

After adjusting for foreign exchange, restructuring and impairment costs and income taxes, BRP’s normalized profit was $86.8 million or 75 cents per share, down from $116.5 million or 98 cents per share in the fourth quarter of 2015.

Revenue for the three months ended Jan. 31, 2016, grew 3.8 per cent to $1.11 billion, including a $98-million gain from the higher value of the U.S. dollar compared with the loonie.