3 minute read
International news – Revenues up profits down
International news International news
With financial editor Roger Willis
Revenue up, but profits down for Pierer and Polaris
Rounding off 2022’s half-yearly corporate reporting season, our final pair of bike manufacturing contenders make the best of continuing supply-chain disruptions
PIERER: FEELING PAIN
The usual litany of supply-chain disruption and component shortages had a noticeable impact on group performance at KTM, Husqvarna and GasGas parent Pierer Mobility in the first half to 30 June.
Although overall revenue in the period was 7.1% up to £991.2m, good news stopped there. Operating profit sank by 9.6% to £79.7m. Operating margin fell from 9.5% to 8%. Net profit was 12.9% down to £58.6m.
Net debt had almost doubled since the beginning of this year, rising to £328.9m. But much of that would have been a seasonal rather than distress feature. Return on capital employed slid from 17.4% to 15.3%. And Pierer’s share price had declined by 20.6% on a rolling annualised basis.
Global motorcycle sales volume dropped by 7.2% to 163,344 machines. Lack of parts and supply-chain issues were particularly apparent in Europe and India. European sales were 15% down to 61,435, while Indian volume plunged by 40.3% to just 18,251. However, North American dealers sold 44,689 bikes, an impressive 47% increase. A lot of these would have been motocross and enduro models, less dependent on the availability of complex electronics.
Total worldwide motorcycle production in Austria, China, India and Spain was 0.8% in arrears at 169,991. Within that tally, Pierer’s main plant on home turf in Mattighofen boasted a 6.7% production increase to 91,019.
On a brighter note, Pierer Mobility Group anticipates an improved ability to meet demand in the second half of 2022, despite ongoing supply challenges and widespread deleterious economic forecasts. “This will strengthen presence in principal markets and gain market share in the relevant premium motorcycle segments,” the company says. It has, therefore, raised annual revenue growth expectations from a previously estimated range of 6-10% to 10-15%.
Euro-sterling currency translation at forex rates applicable on 31 August
Pierer Mobility
POLARIS: PROFITS DOWN
The same old story of rising revenues confounded by crumbling profitability afflicted leading US off-road vehicle (ORV) and motorcycle manufacturer Polaris Industries.
Across the full January-June period, overall turnover climbed by 4.8% to £3.316bn. But operating profit suffered a 25.5% decline to £253m. A double-take on the bottom line was then necessary to cope with impairments from discontinued operations (because Polaris had disposed of a business unit, Transamerican Auto Parts, in the second quarter). In the first instance, net profit from continuing operations fell by 25% to £187m. Once impairments had been factored in, the bottom line was rewritten as plummeting by 77.6% to just £57m.
This contrast appeared to be even more dramatic in Q2 numbers. Revenue actually rose by 7.9% to £1.78bn, operating profit was only 8.4% down at £167m, and net profit from continuing operations fell by 8.5% to £123m. However, accounting for the impairment’s full force meant the company actually incurred a Q2 net loss of £4m, versus a Q2 2021 net profit of £137m.
Brushing such distractions aside, Polaris is still assailed by the standard list of postpandemic disruption issues, according to its chief executive Mike Speetzen. But he noted “some easing of logistics complexities, commodity costs and supply-chain bottlenecks” going forward into the second half of 2022.
During Q2, key revenue from Polaris ORV wholesale shipments to dealers improved by 6.6% to £1.288bn. Its on-road segment, primarily encapsulating the Indian motorcycle brand and Slingshot trikes, had flatlined – a mere 0.4% up to £259m.
However, Speetzen admitted that North American ORV retail sales in Q2 were about 25% down and Indian-brand motorcycle retail in the US and Canada had plunged by more than 40%, in both cases due to dealer inventory shortfalls.
Dollar-sterling currency translation at forex rates applicable on 1 September www.britishdealernews.co.uk
