Polaris Q2 Sales Up 21%

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Polaris Industries Inc. says total sales for the second quarter, ended June 30, totaled $455.7 million, an increase of 21 percent over last year's second quarter sales of $376.9 million. Total sales for the six months ended June 30 were $844.37 million, up 22 percent from sales of $694.62 million for the first six months of the previous year.

Polaris says the increase in sales is primarily attributable to increased operating performance of the company's side-by-side vehicles, international operations and parts, garments and accessories businesses.

For the second quarter ended June 30, Polaris ATV sales totaled $350.2 million, up 24 percent from $282.1 million last year; snowmobile sales totaled $6 million, up 36 percent; Victory sales were $23.4 million, down 19 percent; and PG&A sales were $75.9 million, up 24 percent.

For the six months ended June 30, Polaris ATV sales totaled $614.8 million, up 22 percent; snowmobile sales were $15.4 million, up 111 percent; Victory sales were $50.7 million, down 9 percent; and PG&A sales were $163.4 million, up 28 percent.

The Minnesota-based manufacturer says the overall market for more traditional core ATVs sold in North America remained weak during the second quarter resulting in fewer shipments of Polaris ATVs to North American dealers as they continued to reduce their core ATV inventory levels — which the company says are down ten percent from the same time last year.

Polaris says the new RZR side-by-side recreation vehicles continued to sell well along with the new RANGER Crew six-passenger utility vehicles; the North American motorcycle industry retail sales for heavyweight cruiser and touring motorcycles "remained weak;" PG&A was driven primarily by increased sales of ATV and side-by-side vehicle product; and snowmobile deliveries to dealers are scheduled to ramp up significantly in the second half of the year.

There was one low-point to Polaris' results: income from financial services decreased 62 percent to $5.2 million in the 2008 second quarter compared to $13.9 million in the 2007 second quarter due to what Polaris says was its revolving retail credit provider, HSBC, discontinuing the financing of non-Polaris products at Polaris dealerships in July 2007 and eliminating the volume-based fee income payment to Polaris as of last March 1.

Polaris Industries, Inc. CEO Tom Tiller says the company was happy with its results in a "very challenging macroeconomic environment."

"Eighteen months ago, we laid out an aggressive plan to generate superior results based on three pillars; winning in our core businesses, delivering operational excellence and capitalizing on our growth businesses — our results this quarter and for the first half of 2008 clearly reflect the commitment of our entire organization to achieving these goals," Tiller said.

Outlook
Polaris forecasts its sales for the full year 2008 to grow in the range of 9 to 11 percent over full year 2007 sales of $1.78 billion.

The company expects total sales to increase in the range of two to five percent over the third quarter 2007, which was the first quarter of the start of significant shipments of the RZR.

"We expect continued sales growth in side-by-side vehicles, PG&A and international operations offset by a continued weak core ATV market, higher commodity costs and significantly lower financial services income due to the company's revolving retail credit provider, HSBC, eliminating the volume-based fee income payment to Polaris in March of this year," Tiller said.

"Despite a tough external environment that is not likely to improve in the near-term, we expect the momentum that we generated in the first half of 2008 to carry over into the second half of the year," he said.