Although Russian consumers rushed out to buy luxury goods late in the year as the ruble nose-dived, BRP Inc. (TSX:DOO) said Russian revenues were down 25 per cent last year. Excluding Eastern Europe, international revenues increased eight per cent.
"We are planning for reduced snowmobile volume in North America and a further volume decline in Russia as our distributor was impacted by weak snowfall and continues to be impacted by the overall economic condition," CEO Jose Boisjoli said Friday during a conference call.
BRP anticipates Russian sales in its current 2016 financial year will be half the level they were in its 2014 financial year.
The ongoing weakness in its largest market outside North America contributed to BRP issuing an outlook that disappointed analysts.
The company said expects its normalized earnings in its 2016 financial year could slip by as much as nine per cent from the $1.65 per share earned last year and range between $1.50 to $1.65 per cent. That was below the $1.73 per share forecast by analysts. Overall revenues are forecast to increase by five to nine per cent compared with 10 per cent growth last year.
The outlook came as the Quebec-based company said Friday it swung to a profit of $8.5 million or seven cents per share in the fourth quarter from loss of $6.2 million or five cents per share a year ago. Revenue for the three months ended Jan. 31 grew to $1.07 billion from $902.9 million a year earlier, helped by growth in North America.
Excluding financing costs, income taxes and other items, its normalized net income surged to $116.5 million or 98 cents per diluted share. That compared to $48.3 million or 41 cents per share a year earlier.
BRP was expected to earn 79 cents per share in adjusted profits on $1.02 billion of revenues, according to analysts polled by Thomson Reuters.
Analyst Benoit Poirier of Desjardins Capital Markets was optimistic about BRP's future even though the weaker guidance offset the strong fourth-quarter results.
"We believe the ramp-up of the Mexican facilities and the recent introduction of compelling products...places BRP in a good spot to continue gaining market share in fiscal year 2016 and beyond," he wrote in a report.
BRP is building a second production facility in Mexico that will begin production of traditional watercraft in the fourth quarter of the current fiscal year.
For the full year, the company earned $70.2 million or 59 cents per share, up from $59.9 million or 53 cents per share a year ago. Revenue grew 10 per cent to $3.5 billion from $3.19 billion as a 14 per cent increase in North America offset a weaker performance in Eastern Europe.
Note to readers: This is a corrected story. An earlier version incorrectly stated the expected drop in Russian sales.