Successive years of below average snowfall has caused Polaris to turn to their other product lines to keep the company strong. According to Chief Executive Tom Tiller, Polaris is producing less than half as many snowmobiles as it did seven to eight years ago. As Polaris’ financial results for 2005 show, the company relied on snowmobiles for just 14 percent of its $1.9 billion in total sales.
Though the company still aims to increase its snowmobile business, the company’s snowmobile production lines and workers have already switched over to making all-terrain vehicles and Victory motorcycles. Sales of Polaris ATVs went up 7 percent in 2005, with international sales up 20 percent and Victory motorcycle sales increased 34 percent, with the product line returning a profit for the first time in the fourth quarter. For 2005, snowmobile sales decreased 11 percent, reflecting lower dealer orders following a disappointing selling season, but the Parts, Garments and Accessories sales increased 9 percent for the whole year.
Inventories of Polaris ATVs at dealerships are up, and the company expects it will take the first half of 2006 to balance supply with demand. Inventories of snowmobiles are up too, and were higher at the end of December than they were a year ago. Tiller told stock analysts the company expects modest growth this year, and gave earnings guidance of $3.23 to $3.38 per share for the full-year 2006. That was lower than the $3.57 per share that Wall Street was expecting.