BRP chief José Boisjoli at the company's research and development plant in Valcourt, Que., on May 30, 2019.Christinne Muschi/The Globe and Mail
Powersports vehicle maker BRP Inc. DOO-T has begun searching for a new chief executive after decades-long leader José Boisjoli said he’ll retire by the end of January.
His replacement will have to navigate a volatile business environment, as the powersports industry hankers for a sales recovery that has so far proven elusive.
BRP, the Valcourt, Que.-based manufacturer of Ski-Doo snowmobiles, Sea-Doo watercraft and Can-Am off-road vehicles, said Thursday that Mr. Boisjoli will leave the company by the conclusion of its current fiscal year.
Mr. Boisjoli, who was born on a farm in Wickham, Que., and grew up riding snowmobiles and motocross bikes, has led BRP since its split from Bombardier Inc. in 2003. Observers of the corporation often say he has an instinctual feel for what customers want, and that he’s pushed hard on innovation, piloting the introductions of dozens of new models and technology.
Under his watch, BRP has diversified its product lineup by pushing hard into non-seasonal side-by-side vehicles, hired thousands more employees and boosted annual profit above $700-million. The company now has a market capitalization of $3.6-billion and holds a roughly one-third share of the global powersports market.
BRP saw a major boost in sales during the pandemic, as people spent more of their discretionary spending on recreational vehicles instead of plane travel, hotels and public concerts. But business has been much trickier of late.
U.S. tariffs turn Canadian Ski-Doo maker BRP’s Mexico production hub into a liability
In light of softer demand in recent quarters, the company reduce shipments to protect the brand and better align deliveries with retail sales. Dealers have been hesitant to carry a lot of inventory, and promotions have been increased.
The Quebec manufacturer, whose biggest market is the U.S., is also feeling the pain from President Donald Trump’s trade war, which is affecting both sales and the supply chain.
Consumers, especially from the U.S., continue to hold back on buying because of broader worries about the U.S. economy in particular. The number of Americans filing new applications for jobless benefits increased more than expected last week, and the unemployment rate appeared to have picked up in May, new data from the U.S. Labor Department shows.
“The biggest risk for all of us in the industry is the uncertainty that it creates into the customer confidence,” Mr. Boisjoli told analysts on a conference call Thursday. “Many are on the fence, and they’re waiting to have better visibility before they will buy our products.”
Lower-income customers who finance their purchases are being “squeezed” with inflation and interest rates that remain on the high side, and they’re showing more reticence to buy than higher-income clients, the CEO said. This is showing up in the models being purchased, with entry-level products getting hit particularly hard, he said.
“It’s very difficult to predict where all of this is going.”
Meanwhile, tariffs already in place on imports into the United States, including a 25-per-cent levy on steel and aluminum products, will likely deal a $60-million to $70-million hit to the company this year as measured by cost of goods sold, BRP said in an updated forecast Thursday.
That’s up from a previous estimate of $40-million, though most of BRP’s finished vehicles aren’t subject to any tariffs because they are stamped compliant under the United States-Mexico-Canada Agreement.
The company reported net income of $161-million or $2.19 per share for its first quarter. Revenue came in at $1.85-billion, down 7.7 per cent compared with last year. On an adjusted basis, earnings before interest, taxes, depreciation and amortization was $201-million, and earnings per share was $0.47, roughly in line with analyst forecasts.
Mr. Boisjoli will continue to lead the company until a successor is appointed. A board search has begun for his replacement, which will consider both internal and external candidates, BRP said.
“The retirement is not likely to be overly surprising for investors, but given his 22 years as CEO and the significant growth of the company under his leadership, Mr. Boisjoli will be difficult to replace,” National Bank of Canada analyst Cameron Doerksen said in a note.
With a report from Reuters.