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BRP preparing to resume vehicle production after fire at Mexico facility

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VALCOURT, Que. — BRP Inc. is preparing to resume production of side-by-side vehicles following a weekend fire in the storage yard of its Juarez 2 facility in Mexico.

The Quebec-based recreational products company says a fire Saturday in the facility's storage yard destroyed some units representing about six days of production.

All employees on site were evacuated and there are no reported injuries or damage to the facility.

BRP says it expects to receive clearance from authorities mid-week.

Chief executive Jose Boisjoli says he doesn't anticipate any material impact on its business from the disruption.

He says the incident will delay some side-by-side deliveries.

Cameron Doerksen of National Bank Financial says the loss of more than 1,000 vehicles will be covered by insurance.

Still, he said the production setback is another challenge faced by BRP and the powersports industry as a whole that has been gripped by semiconductor shortages over the past year.

"The Juarez 2 plant is expected to restart production by mid-week, but the loss of production units and the short plant shutdown will exacerbate the already challenging production conditions (upwards of 10 days of lost production at Juarez 2 due to this incident)," he wrote in a report.

He said retail dealers have been impacted by exceptionally low inventories that are less than a quarter of pre-pandemic levels.

BRP is building a new plant in Juarez that will open later this year to ramp up production and begin to alleviate low inventories.

"Although the fire is a clear setback for BRP, we do not believe it changes the fundamentals of the company, which remain strong supported by still solid demand for powersports products, low dealer inventories that will drive restocking demand through fiscal 2023, and our expectation that BRP will continue to gain market share through the introduction of new products."

Doerksen said the fire could impact the company's full-year guidance but BRP's wide range for normalized profits of between $7.75 and $8.50 per diluted share already reflected some uncertainty around production-related issues.

This report by The Canadian Press was first published July 19, 2021.

Companies in this story: (TSX:DOO)

The Canadian Press

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