Economic uncertainty stirred up by whipsawing U.S. tariff threats prompted BRP Inc. to push back its financial forecast for the coming year, with the trade limbo exacerbating weak consumer demand that drove the Ski-Doo maker to an earnings loss last 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 per cent tariffs on trade partners next week.
The U.S. has already hit Canada and Mexico with 25 per cent levies on goods that are not compliant with the North American free trade pact. The reprieve Trump granted on March 6 for items that do comply — a climbdown from blanket tariffs rolled out two days earlier — is also set to expire in a week.
Canada has struck back with its own duties on about $60 billion worth of American goods, and threatened tariffs on $95 billion more if the U.S. does not back down.
“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 on a conference call Wednesday.
“That uncertainty is a bigger overhang than the potential opportunity of buying a product with no tariffs today. It says a lot about the how the consumer is feeling.”
BRP swung to a loss of $44.5 million in the fourth quarter, down from a $302.8-million profit a year earlier.
As consumers and dealers spent less, North American retail sales at BRP dropped 21 per cent year-over-year in the quarter ended Jan. 31, largely due to lower demand for snowmobiles and market share loss in off-road vehicles.
Revenue from year-round products, which include side-by-side and all-terrain vehicles and account for more than half of total sales, decreased 17 per cent. Retail sales of BRP’s three-wheeled motorcycles fell about 30 per cent.
CEO José Boisjoli pointed to the “difficult macroeconomic environment, softer industry and continued pressure on consumer demand.”
A continental trade war bodes ill for a company with factories in all three countries — the direct result of free trade agreements dating back decades. Some 60 per cent of BRP’s revenue stems from the U.S. Most of the inventory sold there is made in Mexico — 70 per cent of total production happens south of the Rio Grande — or Canada, where Ski-Doos and some of its Can-Am three-wheelers roll off the line.
While the damage from 25 per cent steel and aluminum tariffs imposed by the U.S. on March 12 will mostly be limited to its minuscule parts and accessories operation, BRP said the overall tariffs now in effect could take a $40-million bite out of its business if they last through the year — never mind any levies still to come.
A blow that big would amount to 64 per cent of its full-year profit of $62.7 million.
“It could have a sizable impact if tariffs were imposed on all goods crossing the border,” said Martel.
Boisjoli noted that BRP started renting warehouse space in the U.S. in December to be able to ship more products ahead of tariff deadlines.
“We probably have a month of inventory altogether that is on the other side of the border,” the CEO said.
Despite trade headaches and tight-fisted consumers, BRP beat earnings expectations in its latest quarter, triggering a 7.4 per cent jump in its share price, which closed up $3.77 to $54.55 in late-afternoon trading on the Toronto Stock Exchange.
On a normalized basis, the company’s diluted earnings hit 98 cents per share in the fourth quarter versus $2.78 per share the year before. Analysts had expected 88 cents per share, according to financial markets firm 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 said the Valcourt, Que.-based company is well-positioned “for an eventual market rebound.” But he cautioned that the industry faces “another trough-like year as consumer demand remains tepid” and competitors pursue discounts that could force price cuts at BRP or eat into its market share.
In October, BRP put its marine businesses up for sale as it looked to double down on powersports products and cut the cable on its money-losing boat brands.
The discontinued operation marked another drag on its bottom line last quarter. Net losses in the segment rose 52 per cent year-over-year to more than $175 million, due mainly to an impairment charge on its assets.
Total revenue for the three-month period fell 20 per cent to $2.1 billion from $2.6 billion in the same period a year earlier.
This report by The Canadian Press was first published March 26, 2025.
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