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Aug. 11, 2008 – Polaris’ 2nd quarter sales grow 21 percent

August 11, 2008
Filed under Features

A dramatic rise in international sales and continued growth in the side-by-side segment allowed Polaris Industries to post revenue and net income increases in its second quarter.
Polaris reported a 21 percent rise in sales compared to a year ago and a record net income of $24.4 million for its second quarter. Those improved numbers came despite lowered financial services income, higher commodity costs and continued struggles in the core North American ATV market. Those factors were overcome thanks to a nearly 40 percent rise in international revenue and the growth in UTV sales.
“Polaris is performing at a high level in a tough market,” Tom Tiller, Polaris CEO, said in a conference call on July 15, the day second-quarter numbers were reported.
Those quarterly results showed revenue growth in three of the company’s four segments: ATV, snowmobiles and PG&A. The latter was up 24 percent over a year ago thanks primarily to increased ATV and UTV sales. The company’s ATV revenue — easily the largest of its four segments — increased 24 percent to more than $350 million because of increased UTV and international sales. Revenue from core North American ATV sales remain down compared to previous years but retail sales and shipments of side-by-sides are up more than 50 percent compared to the year-ago period.
Bennett Morgan, president of Polaris, said he believes core U.S. ATV sales will “remain challenging for the foreseeable future” but also noted the company’s UTV sales have risen to the point where an independent survey found Polaris is now tops in side-by-side market share.
Victory Motorcycles represents the only segment that was down in terms of revenue from a year ago. Victory ended the second quarter with $23 million in sales, a 19 percent drop from a year ago. That decline is a result of Polaris correcting dealer inventories, company officials said, and not an indication of retail sales. While the heavyweight cruiser segment is sluggish, Victory is slightly up in retail sales and also has picked up some market share.
While Victory cruiser sales are soft, company officials report good sales on the Vision, Victory’s luxury touring model. Victory sales in the future will be impacted by the company’s ongoing international efforts. The company plans on distributing bikes in Australia later this year.
Polaris also will start distributing directly to Spain, Europe’s fourth-largest market. Morgan said Europe’s ATV market, although down in the low single digits in terms of percentage growth, is stronger this year than the U.S. market. Polaris continues to gain market share there and is now approaching the No. 1 spot.
In other company news discussed during the quarterly conference call, Polaris officials said:

  • The company is testing a new distribution plan for some of its dealers. Morgan said the company will start a regional test for core ATV and side-by-side ordering “that changes the fundamental powersports business model premise” of ordering once or twice a year. The plan, which Polaris has not specified due to competitive concerns, calls for more frequent ordering.
  • Despite considerable challenges with the economy, Polaris is looking for its yearly sales to improve 9-11 percent over the prior year. psb
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