BRP vows to remain in Mexico even if Trump’s withdrawal from NAFTA raises tariffs

MONTREAL — The maker of Ski-Doos, personal watercraft and off-road vehicles says it will maintain low-cost production in Mexico even if Donald Trump withdraws from NAFTA.

BRP Inc. (TSX:DOO) says it expects to take a $20-million to $25-million hit if tariffs are restored on more than $1 billion of goods traded annually between Mexico and the United States.

Chief executive Jose Boisjoli says the impact of 1.4 to 2.9 per cent tariffs on goods from Mexico would be “manageable.”

The Quebec-based recreational products maker would expect to pass costs to suppliers, increase prices and adjust operations, just as it would if faced with higher inflation.

Chief financial officer Sebastien Martel told analysts Friday that despite the higher tariffs, BRP benefits from access to lower-cost skilled workers and supply base in Mexico.

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Boisjoli said in an interview that the situation is similar to Russia’s decision to add a new tax on imported goods after years of rumours.

He says the impact could be less since it’s unclear how far Trump will go, with both Canada and Mexico saying they’re willing to renegotiate the 25-year-old trade deal.

Boisjoli adds that higher costs could be offset by Trump’s promise to cut corporate taxes and the improving U.S. economy, which would be positive for the power sport industry.

BRP has made some of its goods in Mexico since 2001 and currently operates three plants that employ nearly 4,000 people or 40 per cent of its global workforce.

Meanwhile, the company raised its earnings and revenue guidance for next year after reporting strong third-quarter results.

BRP’s net income increased 20 per cent to $78.7 million on $1.08 billion of revenues. Adjusted profits almost doubled to $104.4 million or 93 cents per share, up from $72.8 million or 62 cents per share a year earlier.

Ross Marowits, The Canadian Press