Polaris Releases 2016 Fiscal Year Results
Polaris Industries reported its fourth quarter and 2016 full year results, offering the first look at the company’s finances since its decision to terminate Victory Motorcycles. The fourth quarter saw a 35% year-over-year decrease in motorcycle sales revenue, while year-end sales revenue remained flat compared to 2015.
The past year was a tough one for Polaris, thanks in large part to a significant recall on 133,000 RZR UTVs along with weakened demand for off-road vehicles and motorcycles. Polaris reported a year-end sales revenue of $4.5 billion, a 4% decrease from the $4.7 billion reported for the 2015 fiscal year. Overall, Polaris reported a net profit of $1.1 billion in 2016, compared to a profit of $1.3 billion reported the previous year.
Motorcycle sales (which combines Victory, Indian and Slingshot as well as related parts, gear and accessories) generated $708.5 million in sales revenue in 2016, up a single percent from the $698.3 million brought in the previous year. Fourth quarter revenue was down 35% to $105.7 million, though part of that was caused by reduced production at Polaris’ Spirit Lake, Iowa, factory to complete an upgrade to its paint system.
Regarding Victory Motorcycles, Polaris says the brand has lost money since its inception in 1998. Victory sales reached their zenith in 2012. This was a year after Polaris acquired Indian but before the brand was relaunched, and well before the introduction of the Slingshot. Driven primarily by Victory, Polaris motorcycle sales totaled $240 million in 2012. Today, Victory sales are down about 20% from its peak.
Meanwhile, Indian continues to grow, up “mid-twenty percent”, leading to Polaris’ decision to axe Victory and throw its resources behind the stronger brand as well as Slingshot. Polaris says Victory’s closure will result in accelerated product development for both Indian and Slingshot while removing the financial pressure of carrying the struggling brand.
Polaris expects to suffer one-time costs from Victory’s closure. These costs cover disposing of factory tooling and inventory, cancelling supplier agreements and supporting Victory dealers in selling off their remaining stock.
Looking forward, Polaris expects to see lower motorcycle sales revenue in 2017 thanks to the elimination of Victory. If you count only Indian and Slingshot sales, Polaris forecasts growth in the low double-digits.
Dennis has been a part of the Motorcycle.com team since 2008, and through his tenure, has developed a firm grasp of industry trends, and a solid sense of what's to come. A bloodhound when it comes to tracking information on new motorcycles, if there's a new model on the horizon, you'll probably hear about it from him first.
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I have one piece of advice for Polaris going forward: Push the fucking envelope. Victory failed because they were content to make half steps forward, but not really anything actually progressive. If, for example, the Vision had included the V-shaped floorboards from the Vision Concept it would have been a quantum leap in cruiser technology. If any of them had lean angle to match their lean-in, they would have been considered by more than just cruiser guys who didn't like Harley-Davidsons.
Take a note from Ducati's xDiavel and Triumph's Bobber and throw away the rulebook completely. Forward controls don't hold back cruisers, backwards perceptions do. Put out a Scout that can do what the xDiavel can, and people will buy it! I think that's what the founder of the company would have wanted, world-class performance and all-American style.
And do something for the Native American community, since you’re using a racial slur for them as your name.
Polaris deserves some credit. They have been supporting a financial loser for 18 years in the quest to solidify their presence in a dominated market. The whole time Polaris has been growing.