Polaris Tells Suppliers They Must Help Offset Trump Tariff Costs

(Bloomberg) -- Polaris Industries Inc. said its suppliers must help offset the cost of President Donald Trump’s trade wars if they want to keep doing business with the snowmobile and motorcycle manufacturer.

Polaris is being disparately affected by Trump’s trade policies because it relies on China for many components but has invested heavily in the U.S. for final assembly, Chief Executive Officer Scott Wine said on an earnings call Monday. In contrast, the company’s largest competitor for off-road vehicles assembles them in Mexico, and some of its big motorcycle rivals buy many of their components from Japan, he said.

Polaris has petitioned the Trump administration for exemptions on Chinese tariffs but doesn’t know when it will receive an answer, Wine said. The trade war took a toll, pushing Polaris’s stock price down about 31 percent from a January peak. The Medina, Minnesota-based company on Monday left its guidance for 2018 tariff costs unchanged at $40 million, relieving investors who pushed the stock up 3.5 percent to $93.48 at 12:54 pm in New York Stock Exchange trading.

To offset rising tariffs, Wine said, Polaris is “making good progress with domestic suppliers saying, ‘Hey, we’re not taking that price increase.’ Or more recently, telling our Chinese suppliers, ‘Hey, if you want to continue to be a supplier to us, you’re going to have to take some of these costs.’’’

Wine said he supports the administration’s push for freer trade with China and he’s not going to something “stupid,’’ like building a new assembly plant in Mexico at a time when Trump is trying to stimulate more investment in the U.S.

Adjusted earnings were $1.86 a share in the third quarter, Polaris said in a statement, topping analysts’ average estimate by 30 cents. The company maintained its 2018 earnings guidance of $6.48 to $6.58 a share and didn’t provide a forecast for next year.

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