Polaris Q1 Profits Fell By Nearly Half, Hurt By Sluggish Off-Road Vehicle Sales

Yet the powersports vehicle maker said its motorcycle division posted strong sales growth.

Polaris Q1 Profits Fell By Nearly Half, Hurt By Sluggish Off-Road Vehicle Sales
With a reported double-digit drop in off-road vehicle sales, Polaris Industries said Thursday its first quarter net income was nearly halved from the company’s year-ago take.
Overall sales for the Medina-based maker of snowmobiles, motorcycles and other vehicles took a $50 million dive from the same three-month period ending March 31 last year. The majority of its sales—$720 million of its $983 million total in the 2016 first quarter—came from off-road vehicles and snowmobiles. But sales of Polaris’ off-road vehicles and snowmobiles cumulatively shrunk 9 percent year-over-year.
The brightest spot in Polaris’ start to the year was its motorcycle sales, which rose 18 percent to $188 million. Its Indian brand motorcycles were popular among North American customers in particular as sales jumped upwards of 50 percent. Polaris noted its Victory and Slingshot brand motorcycles also sold rather well with sales increases in the low-teens compared to 2015’s first quarter.
“I still believe 2016 is likely to be another volatile year in powersports, but we are seeing pockets of strength,” said Polaris CEO Scott Wine in a statement. “We remain focused on an all-out assault on costs and rededicating the business to drive growth, not only for this year but as part of a renewed commitment to achieve your 2020 objectives.”
In reference to a 2015 full-year guidance report update Polaris made last December, Wine told investors the company plans to reach $8 billion in sales in five years while exceeding a 10 percent net income margin. Polaris’ full-year sales in 2015 were $4.7 billion.
All in all, Wine said the 2016 first quarter was in line with Polaris’ projections, although the company admitted that it did not foresee a $30 million charge related to warranty and product liability settlements. On Tuesday, Polaris also voluntarily recalled 133,000 off-road vehicles after 160 reports of fires, including one instance that resulted in death.
Polaris stock has fluctuated in morning trading but remains near Wednesday’s close of $96.23 a share.
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