BRP Q4 Results: Ski-Doo Maker Posts Earnings and Delays Guidance

Economic uncertainty caused by the back-and-forth U.S. tariff threats has forced BRP Inc. to revise its financial outlook for the coming year. The trade uncertainty, combined with weak consumer demand, contributed to the Ski-Doo maker reporting an earnings loss in the most recent quarter.

“There’s still the uncertainty around what’s going to happen on April 2, and I think that is influencing consumer behaviour,” said chief financial officer Sébastien Martel, referring to U.S. President Donald Trump’s pledge to impose 25% tariffs on trading partners next week. That looming deadline has weighed on buyer confidence and purchasing decisions.

How U.S. tariffs are impacting Canadian companies

The U.S. initially announced 25% tariffs that would apply to goods not compliant with the North American free trade pact, then granted a temporary reprieve on March 6 for compliant items. That exception is set to expire soon, keeping importers and manufacturers on edge.

In response, Canada has applied retaliatory duties on about $60 billion of U.S. goods and has warned of additional tariffs covering another $95 billion if the U.S. does not reverse course. The uncertainty created by this tit-for-tat has curtailed consumer spending, according to BRP executives.

“It’s difficult to call. It’s been choppy, and obviously with the uncertainty created by all of this, the consumers are holding back,” Martel told analysts. He added that the fear and unpredictability around tariffs represent a larger drag on demand than any short-term advantage consumers might see from buying products before tariffs are applied.

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BRP’s Q4 earnings

BRP reported a fourth-quarter loss of $44.5 million, a reversal from a $302.8-million profit in the same quarter a year earlier. The downturn reflected weaker consumer spending and reduced dealer orders, particularly for snowmobiles, as well as market share losses in off-road vehicles.

North American retail sales at BRP fell 21% year-over-year in the quarter ended Jan. 31. Revenue from year-round products—such as side-by-side and all-terrain vehicles, which account for more than half of total sales—declined 17%. Retail sales of BRP’s three-wheeled motorcycles also fell by roughly 30%.

CEO José Boisjoli cited a “difficult macroeconomic environment, softer industry and continued pressure on consumer demand” as key factors behind the results.

Where does BRP manufacture its products?

A potential continental trade war presents a particular challenge for BRP, which operates factories across the three countries involved in North American trade. About 60% of the company’s revenue comes from the U.S., and the majority of inventory sold there is manufactured in Mexico—roughly 70% of total production takes place south of the Rio Grande. Canada remains the site for Ski-Doos and some Can-Am three-wheelers.

While the immediate impact of the 25% U.S. steel and aluminum tariffs introduced on March 12 is mainly confined to BRP’s relatively small parts and accessories business, the company warned that broader tariffs in place for a full year could reduce revenue by an estimated $40 million. That loss would equal roughly 64% of BRP’s full-year profit of $62.7 million, underscoring the potential scale of the threat.

To mitigate risk, BRP began renting warehouse space in the U.S. in December to move more inventory across the border before tariff deadlines. “We probably have a month of inventory altogether that is on the other side of the border,” Boisjoli said, highlighting the company’s short-term logistics response to the evolving tariff environment.

Analyst expectations

Despite trade pressures and cautious consumers, BRP outperformed adjusted earnings expectations for the quarter, prompting a 7.4% rise in its share price; the stock closed up $3.77 at $54.55 on the Toronto Stock Exchange.

On a normalized basis, BRP’s diluted earnings were 98 cents per share in the fourth quarter, down from $2.78 per share a year earlier, but above the 88 cents per share analysts had forecast, according to LSEG Data & Analytics.

“All things considered, (it) could have been much worse,” said Desjardins analyst Benoit Poirier in a note to investors. National Bank analyst Cameron Doerksen observed that the Valcourt, Que.-based company is positioned for an eventual market rebound but warned the industry may endure another weak year as consumer demand remains subdued and competitors push discounts that could pressure BRP’s pricing or market share.

In October, BRP placed its marine businesses up for sale to focus on its core powersports operations and to exit its money-losing boat brands. The discontinued marine operation was another drag on quarterly results: net losses in that segment rose about 52% year-over-year to more than $175 million, primarily due to an impairment charge on related assets.

Overall, total revenue for the three-month period declined 20%, falling to $2.1 billion from $2.6 billion a year earlier as the company navigated weaker retail demand and industry-wide headwinds.

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