The Can-Am Spyder is assembled at BRP manufacturing facilities in Valcourt, Que. BRP does almost all its production at factories in Mexico and Canada and its biggest market is the U.S.Christinne Muschi/The Canadian Press
Canadian power sports vehicle maker BRP Inc. BRP-T has restored its financial forecast after pulling it over U.S. tariff changes just six weeks ago, saying it expects a significant decline in profit for the coming year compared to its previous outlook even as it pushes to soften the impact of the levies.
The manufacturer of Can-Am off-roaders and Sea-Doo watercraft announced the new estimates Thursday, together with first quarter earnings. It is the second earnings report for chief executive Denis Le Vot, who replaced long-serving CEO José Boisjoli in February.
BRP’s executive team now expects the company to generate normalized earnings of between $3 and $3.50 per share for the year, compared to a previous forecast of between $5 and $6 per share. And they’re forecasting a revenue increase, to between $9.13-billion and $9.38-billion, compared to their previous estimate of $8.9-billion to $9.15-billion.
“As tariff policies shifted significantly during the quarter, our teams moved quickly to define mitigation measures to reduce their impact,” Mr. Le Vot said. “Looking ahead, we are focused on navigating these headwinds while also protecting our long-term growth prospects.”
Valcourt, Que.-based BRP suspended its financial forecast in mid-April, warning it faces a potential hit to its business of at least $500-million for the remainder of the year from new changes the White House has made to U.S. tariff policy. The company subsequently lost more than a third of its stock market value but the shares have been inching up since.
The Trump administration recently amended Section 232 import tariffs on finished products made with steel, aluminum, and copper, imposing a 25-per-cent tariff on the entire value of the finished good that contains any of the three metals. Previously, the duty was 50 per cent on the value of the metal itself that was used in the product.
The change, which came into effect April 6, results in a 25-per-cent levy on the total value of BRP snowmobiles sold into the U.S. and affects the majority of its offroad vehicle models sold into the country, according to the company. BRP does almost all its production at factories in Mexico and Canada and its biggest market is the U.S.
BRP’s underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) is running at about $60-million better than expected compared to the annual guidance announced last month, National Bank analyst Cameron Doerksen said in a note. He said the company has identified about $200-million worth of initiatives to dull the impact of tariffs.
That’s positive but BRP “still faces significant impact from the Section 232 tariff changes that fundamentally changes the near-term profitability profile for the company,” Mr. Doerksen said in a note Thursday. The looming renegotiation of the United States-Mexico-Canada Agreement also remains a potential risk for the company, he said.
BRP reported net income of $127-million or $1.73 per share on revenue of $2.34-billion for its latest quarter ended April 30. On an adjusted basis, EBITDA came in $334.4-million and earnings were $1.83 per share, ahead of analyst estimates.