Canadian Manufacturing

BRP CEO says U.S. tariffs remain a drag on its growing boat business

The maker of Ski-Doo snowmobiles and Sea-Doo watercraft wrapped its agreement Thursday to buy 80% of Telwater's outstanding shares


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BRP Inc. has closed a deal to acquire a majority stake in Australia’s largest aluminum boat maker, Telwater Pty. Ltd., furthering the company’s push into the multi-billion fishing and pleasure boating market—uncharted waters for BRP until last year—despite the pain of metal tariffs.

The maker of Ski-Doo snowmobiles and Sea-Doo watercraft wrapped its agreement Thursday to buy 80% of Telwater’s outstanding shares. Its owner and managing director, Paul Phelan, will stay on with the company and retain 20% ownership.

Telwater marks BRP’s third push into watercraft in the past year after the Quebec-based firm acquired Alumacraft Boat Co. and Manitou Pontoon Boats last summer. The additions drove a one-third rise in marine product revenues to $146.3 million in the latest quarter.

Chief executive Jose Boisjoli declined to specify the purchase price, but said Telwater, which owns the popular Quintrax aluminum boat brand, notches about $100 million in annual sales.

“For Australians, Quintrax boats are like Ski-Doos for Quebecois,” Boisjoli said in a phone interview.

The CEO is intent on casting a line to the world’s 700 million anglers via fishing and pontoon boats.

“The boat market is a very big market. It’s over $20 billion worldwide. And if you look in the category of 15-to-25-foot boats, where do you start?” he asked.

Aluminum fishing and pontoon boats comprise 50% of that market, Boisjoli said.

After its spate of acquisitions, BRP will take a pause on future purchase plans around watercraft, he added. “Short-term, we don’t intend to acquire more companies.”

The nearly year-long trade war between the United States and Canada has dented BRP’s margins, with the U.S. imposing a 10% tariff—lifted in May—on aluminum for 50 weeks, Boisjoli said. Ongoing U.S. tariffs on aluminum imports from China—where the material for some of the company’s boats originates—remain a drag on BRP business.

“This is affecting us for sure, but I see this as short term,” Boisjoli said. “Obviously it’s not fun. We need to manage it. But at the same time, it’s a short term pain.”

He pointed to BRP’s manufacturing flexibility and product diversity, which includes ATVs, three-wheeled motorcycles and Evinrude outboard motors—of which Telwater was the Australian dealer for three years before BRP acquired it.

“Our assembly lines are look-alikes. They are standardized between all the manufacturing facilities. If you visit Valcourt, the way the line is set up is similar to what we have in Mexico or in Finland,” he said.

“If a new regulation would happen, it would take 12 months or 18 months to adapt, but we could move stuff around,” he said.

News from © Canadian Press Enterprises Inc. 2019

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