Polaris Industries Inc. (NYSE:PII) (PSE:PII) says net income for its first quarter ended March 31, 2006, was $11.5 million, or $0.27 per diluted share, down from net income of $17.6 million, or $0.39 per diluted share in the first quarter of 2005.
Sales during the 2006 first quarter were $333.5 million, down seven percent from last year's first quarter sales of $358.3 million.
Snowmobile sales for the period totaled $2.5 million, plummeting from $7.2 million during last year's first quarter; ATV sales decreased eight percent; sales of Victory motorcycles increased eight percent; and, buoyed by Parts, Garments, and Accessories sales for ATVs, motorcycles and utility vehicles, Polaris' first quarter PG&A sales were up a mere one percent compared to last year's first quarter.
Polaris leadership said the first quarter results met expectations.
"It has become obvious that our previous expectations for snowmobile sales for the full year 2006 were optimistic,” Polaris Chief Executive Officer Tom Tiller said in a prepared statement. “There are a number of challenges currently affecting our snowmobile business; including declining overall market demand, poor snowfall this past riding season, higher warranty costs resulting from some of our past new product introductions and the resulting decline in dealer confidence.
“Collectively, these issues have resulted in slower retail sales, increased inventories, and weaker new order demand for snowmobiles. While these issues have been challenging, we are confronting them head on and are in the process of implementing plans to strengthen our long-term competitive position in the snowmobile business."
Concerning the ATV business, Tiller said: “As expected, our decision to reduce North American ATV shipments to dealers in the 2006 first quarter resulted in reduced overall company sales and earnings when compared to the same period last year. We made progress in reducing factory inventories and dealers adjusted their ATV orders to Polaris to continue rebalancing their inventory levels. However, both Polaris and our dealers still have more work ahead of us as we strive to bring ATV inventories in line with expectations.”
Polaris said second quarter sales are expected to be nine percent to 12 percent lower than during the second quarter of 2005, mostly due to lower snowmobile orders and a continuing objective to reduce ATV inventories at North American dealerships.
Polaris expects sales for the full year 2006 to be one to three percent lower than during full year 2005. The company continues to expect full year 2006 Victory motorcycle sales to be 15 to 20 percent higher than the full year 2005.
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