VALCOURT, Québec – BRP’s consolidated revenues fell 5 percent for the three-month period ended April 30, dropping to C$594.0 million from C$623.9 million for the same period last fiscal year, a decrease of C$29.9 million, the company reported in release earlier this week.
BRP said the decrease is due to the unfavorable impact of the strengthening of the Canadian dollar as compared to the U.S. dollar for approximately C$28.0 million.
The company’s consolidated gross profit reached C$115.3 million for the period, compared to C$90.2 million for the same period last fiscal year, an increase of 28 percent. That increase was said to be primarily due to favorable product and pricing mix for approximately C$19.2 million, reduced production costs for approximately C$9.8 million as a result of product complexity reduction and restructuring of the operations, all of which were offset by unfavorable exchange rates variations for approximately C$10.0 million.
BRP said gross profit for the first quarter of the previous fiscal year was unfavorably impacted by C$6.4 million as a result of inventory sold during that period, which had been increased to the distributor's selling prices.
"I am pleased with our results because our cost reduction plan is working and we expect it to continue,” said José Boisjoli, BRP's president and CEO. “Product complexity reduction and changes in our operational structure have greatly improved our cost structure and also our ability to offset the fluctuations of the Canadian dollar against the U.S. dollar and the Euro."
Marine Engines results
BRP’s Marine Engines segment revenues decreased to C$138.6 million for the three-month period ended April 30, compared to C$151.1 million for the same period last fiscal year. The decrease results primarily from lower number of units sold resulting from the reduction of the number of SKUs for approximately C$8.0 million and the strengthening of the Canadian dollar in relation to the US dollar for approximately C$7.0 million.
BRP said the number of Evinrude E-TEC engines sold increased, but was offset by a voluntary reduction of product offerings for other technologies.
The Marine Engines segment operating loss amounted to C$4.8 million, as compared to C$11.6 million for the same period last year. BRP said the decrease in the segment's operation loss results from improved margins due to the SKU rationalization, better margins on the Evinrude E-TEC outboard engines and better channel mix.
BRP launched its Evinrude 2006 line-up during the period, introducing a V4 E-TEC platform for the 115 and 130 hp and a V6 platform for the 150, 175, and 200 hp. As of fall 2005, the Evinrude E-TEC line-up will include five platforms and 13 models from 40 through 250 hp.
"I am proud of BRP's product line-up, Boisjoli said. “We are showing the industry our leadership in the introduction of innovative and exciting new products. This, coupled with our successful cost reduction plan will provide us with the flexibility we need to achieve growth.”
Revenues for BRP’s Powersports segment – which includes snowmobiles, watercraft, all-terrain vehicles, sport boats and Rotax engines – reached C$471.8 million for the period, as compared to C$484.2 million for the same period last fiscal year.
The strengthening of the Canadian dollar was blamed for approximately C$21.0 million, partially offset by a favorable product mix of approximately C$10.0 million.
BRP said the increased number of personal watercraft sold, as a result of a management decision to postpone production to the current fiscal quarter in order to better align the production schedule with the retail season, was offset by a decrease in the number of ATVs sold and also by a reduction in the number of Rotax engines delivered to OEMs.
The Powersports segment operating income amounted to C$33.0 million for the period, as compared to C$6.6 million for the same period last fiscal year. The favorable impact of improved product mix and the SKU rationalization of approximately C$11.0 million, in addition to the improved production costs and lower operating expenses of approximately C$15.8 million, was offset in part by unfavorable movements in foreign exchange rates of approximately C$7.0 million.
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