BRP Faces $500 Million Tariff Burden, Withdraws Financial Forecast
Canadian recreational vehicle manufacturer BRP Inc. has taken the dramatic step of withdrawing its financial outlook for the 2027 fiscal year. The company cites a massive $500 million cost impact stemming from recent tariff changes implemented by the Trump administration in the United States.
"Mind-Blowing" Impact from U.S. Policy Shift
"The magnitude of the impact is mind-blowing, but it is likely the worst-case scenario," stated Stifel analyst Martin Landry in a note to investors. The White House recently simplified its tariffs on items manufactured with steel, aluminum, and copper. This policy change means certain products "substantially made" with these metals are now subject to a 25 percent tax on their full value, rather than a 50 percent tax applied only to the metal content.
For BRP, this translates into a significant new financial burden. The changes primarily result in a 25 percent tariff on the value of snowmobiles and numerous off-road vehicles when they are imported into the United States, the company confirmed.
The market reacted swiftly to the news. Shares of BRP plummeted 33 percent to $71.93 in morning trading in Toronto. "This is a major expense headwind, one likely to impact BRP more than peers" due to its specific manufacturing footprint in Canada and Mexico, noted TD Cowen analyst Brian Morrison. Shares of competitor Polaris Inc. also fell, declining 14 percent in U.S. trading.
BRP expects to incur approximately $500 million in additional tariff expenses for the remainder of the fiscal year, before implementing any measures to mitigate the impact. "We expect BRP will likely raise prices to offset the impact, however, quantifying the impact this would have on volumes is hard to judge," added analyst Martin Landry.
Leadership Responds to "Volatile" Environment
"Like many manufacturers, we are operating in a highly volatile and unpredictable tariff environment that continues to create uncertainty across the market," said BRP Chief Executive Denis Le Vot in a statement released on Tuesday. The company, which manufactures products in the United States, Mexico, Canada, Finland, and Austria, had issued its financial outlook less than three weeks prior to this announcement. That outlook had projected net income between $410 million and $480 million for the year ending January 31, 2027.
About BRP's Product PortfolioThe company's well-known brands include Sea-Doo personal watercraft, Ski-Doo and Lynx snow vehicles, and Can-Am products, which encompass a range of off-road all-terrain vehicles. This diverse portfolio is now directly affected by the new U.S. tariff structure, presenting a substantial challenge to the company's financial performance and strategic planning for the coming fiscal year.
