Harley-Davidson net up but hints at production cut
U.S. motorcycle maker Harley-Davidson Inc. (HOG.N: Quote, Profile, Research) said on Thursday that quarterly earnings rose 19 percent as a strong performance in foreign markets offset a greater-than-expected decline in U.S. sales during a key quarter.
The company reported a second-quarter profit of $290.5 million, or $1.14 a share, compared with $243.4 million, or 91 cents a share, a year earlier.
Sales rose 17.7 percent to $1.62 billion.
Analysts, on average, had expected the Milwaukee-based company to earn $1.13 a share on sales of $1.64 billion, according to Reuters Estimates.
The second quarter is a key one for Harley-Davidson because it coincides with the spring, the busiest time for its dealers in the United States, where the company sells more than half its bikes.
Harley said total dealer retail sales fell 1.2 percent during the quarter, pulled down by a 5.5 percent decline in sales in the United States, the company's biggest and most important market.
That was offset by a 13.4 percent increase in sales in markets outside the United States, including Japan and Canada.
Even so, in a statement, Jim Ziemer, the company's chief executive, acknowledged that the U.S. numbers for the first half of the year had "not met our expectations," in part because the market for heavyweight motorcycles contracted 6.2 percent during the quarter. He said the company would monitor -- and possibly scale back -- wholesale shipments during the rest of the year.
In a note to investors, Craig Kennison, an analyst at Robert W Baird, called the U.S. results "disappointing" and said Harley had "hinted" at a production cut.
Harley said it shipped 95,117 units during the second quarter, a 19.2 percent increase from the same quarter last year, and that it expected to ship between 91,000 and 95,000 bikes during the third quarter of 2007.
Earlier this week, Tim Conder, an analyst at A.G. Edwards & Sons, cut his forecast for Harley-Davidson's 2008 earnings because of concerns about shipment growth assumptions for the U.S. market.
(Published by Reuters, July 19, 2007)