08:38 AM EDT, 05/31/2024 (MT Newswires) -- BRP (DOOO) slashed its fiscal 2025 outlook on Friday as the company's first-quarter results fell, pulled down by lower shipment volume and increased promotional activity.

The maker of snowmobiles and all-terrain vehicles now expects normalized earnings to come in between 6 Canadian dollars ($4.40) and 7 Canadian dollars ($5.14) per share for fiscal 2025, down from its prior guidance of CA$7.25 to CA$8.25. Overall revenue is pegged at CA$8.6 billion to CA$8.9 billion versus previous projections of CA$9.1 billion to CA$9.5 billion.

The consensus on Capital IQ is for normalized EPS of CA$7.80 and revenue of CA$9.33 billion.

"As the year unfolds, our dealers' profitability is under more pressure than anticipated given the current macroeconomic context, a more competitive landscape and high interest rates," Chief Executive Jose Boisjoli said in a statement. "For these reasons, we have decided to adjust our production to further reduce network inventory while continuing to maximize retail sales."

For the three-month period ended April, BRP's normalized EPS dropped to CA$0.95 from CA$2.38 the year before, but topped the Street's view for CA$0.94. Revenue fell 16% to CA$2.03 billion, just ahead of analysts' CA$2.01 billion estimate. The company attributed the decrease in revenue to lower volume across most product lines as it focused on reducing its network inventory levels.

North American retail sales for powersports products slid 5% year-over-year. The total powersports segment's revenue rose to CA$289.1 million from CA$284.9 billion due to higher sales volume and prices. Revenue from year-round products slipped 13% to $1.16 billion while seasonal products tumbled 23% to CA$535.1 million. Marine revenue dropped to CA$53.1 million from CA$122.3 million.

Gross profit margin contracted by 210 basis points to 23.6% as a result of a lower volume sold, and higher sales programs, the company said. Operating expenses widened to CA$355.9 million from CA$341.6 million in the prior-year quarter.

"Our first-quarter results were in line with expectations and reflect our focus on managing network inventory to protect our dealer value proposition," according to Boisjoli. "Our strong product portfolio performed well at retail, especially in the Year-Round Products category, where we gained market share across all product lines."

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