BRP Inc. (TSX: DOO) has suspended its fiscal year 2027 guidance after a U.S. tariff revision on steel, aluminum, and copper imports, effective April 6, slapped a 25% levy on the full value of its snowmobiles and most off-road vehicles, projecting a cost impact exceeding $500 million for the remainder of the year.
The Valcourt, Quebec-based powersports company saw its stock price nosedive 35% to $70.40 by midafternoon on April 15, before recovering slightly in Thursday’s session.
The tariff amendment, stemming from a presidential proclamation addressing national security concerns over metal imports, replaces a prior 50% duty that applied only to the metal content of BRP’s products. With 60% of its revenue generated in the U.S.—while 70% of its inventory is manufactured in Mexico and the rest in Canada—the shift represents a seismic blow to the company’s cost structure.
Just weeks ago, BRP had forecasted a net income of up to $480 million for the fiscal year, with tariff costs pegged at a manageable $90 million. That net income is now expected to be all but erased followed the tariff changes.
CEO Denis Le Vot, who assumed the role on February 1, acknowledged the challenge. “We are operating in a highly volatile and unpredictable tariff environment that continues to create uncertainty across the market,” he said. Despite the financial strain, he pointed to BRP’s solid balance sheet and early-year momentum as buffers to weather the storm.
Analysts, however, painted a grimmer picture of the fallout. National Bank’s Cameron Doerksen noted that the scale of the cost impact “fundamentally changes the profitability profile for BRP” and injects uncertainty into its outlook. RBC Dominion Securities’ Sabahat Khan added that management appears reluctant to impose significant price hikes in the near term, limiting immediate relief.
BRP’s exposure is particularly acute compared to competitors like Polaris, which manufactures snowmobiles domestically in the U.S., while BRP’s Ski-Doo production remains in Quebec. Mitigation options under consideration include drawing down U.S. inventory to dodge border tariffs and redirecting shipments to non-U.S. markets, though no major strategic shifts are planned yet.
A potential lifeline could emerge from the upcoming United States-Mexico-Canada Agreement review in July 2026, where tariff rules might face further scrutiny. For now, BRP holds $430 million in cash as of January 31, alongside a healthy debt ratio, offering some financial cushion against the $500 million headwind.
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