BRP overcomes a decline in its sales – May 15, 2006

Despite weathering a drop in sales, privately held Bombardier Recreational Products Inc. (BRP) gained profitability in its year-ended Jan. 31, rebounding on a favorable product mix and cost-cutting efforts.
BRP said net income for the fiscal year ended Jan. 31 was C$61.6 million ($55 million), up from C$28.5 million ($25.6 million) for fiscal 2005.
Revenues for the year ended Jan. 31 were C$2.36 billion ($2.12 billion), down from C$2.45 billion ($2.2 billion) in 2005.
BRP operates in two segments: the powersports segment includes snowmobiles, PWC, ATVs, sport boats and Rotax engines; the marine engines segment includes outboard engines. BRP said the C$90.1 million ($80.9 million) decrease in revenues for fiscal 2006 is a reflection of a lower number of units sold in the powersports and the marine engines segments, as well as unfavorable foreign exchange rate variations.
Year-end operating income was C$485.4 million ($436 million), up from C$411.4 million ($369 million) for fiscal 2005. BRP said the 18 percent increase corresponds to a 3.8 percentage point improvement in gross profit margin for fiscal 2006 and is primarily due to a favorable product and price mix as well as improved production costs.
For the fiscal year ended, powersports segment sales were C$1.87 billion ($1.6 billion), down from C$1.93 billion ($1.7 billion) last year. Company officials said decreased revenues were primarily caused by the strengthening of the Canadian dollar and a corresponding overall reduction in the number of units sold.
Powersports segment year-end operating income was C$137.2 million ($123 million), up from C$104.1 million ($93 million) for fiscal 2005. BRP said the increase in operating income is because of better product and price mix, improved production costs and restructuring operations.
Marine Engines
Marine engines segment revenues for the recent year ended were C$540 million ($485 million), down from C$561.1 million ($504 million) for fiscal 2005. For the year ended Jan. 31, marine engines operating income amounted to C$12.6 million ($11.3 million), an improvement from an operating loss of C$17.2 million ($15.4 million) for fiscal 2005.
“We are becoming more and more profitable because of a better product mix and our sustained efforts to reduce our costs,” said José Boisjoli, BRP’s president and CEO.
“We expect to continue to experience external pressures, such as high commodity prices and a strong Canadian dollar, while we pursue the implementation of our cost-reduction program and keep on developing and marketing exciting, innovative products for our customers.” psb

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