NEW YORK: Harley-Davidson Inc reported profits on Thursday that were in line with expectations and kept its full-year shipment forecast unchanged as its five-year-long restructuring effort continued to boost its financial performance.
The Milwaukee-based motorcycle maker posted a first-quarter profit of $224.1 million, or 99 cents a share, up from $172.0 million, or 74 cents a share a year ago. The gains came even as dealer retail sales in several key markets showed signs of weakness.
Overall revenue from bikes, parts and accessories, and apparel rose 9.8 percent to $1.57 billion, the company said, due to sharply higher shipments to the company's dealers and distributors.
Analysts, on average, expected Harley-Davidson to report a profit of 99 cents a share on sales on $1.46 billion, according to Thomson Reuters I/B/E/S.
The results contained about a penny a share in restructuring charges. Harley-Davidson has been revamping its manufacturing operations in recent years to cuts costs, become more efficient and introduce flexibility in its workforce.
Like Winnebago Industries, the motorhome manufacturer that has returned to profitability despite sharply lower production and sales volumes by slashing its workforce, closing some factories and restructuring others, Harley-Davidson's efforts to reinvent itself appear to be paying off.
Harley-Davidson said it expects its gross margins, which have widened considerably in recent years as a result of the restructuring, to continue to grow in 2013 to 35.25 to 36.25 percent, up from 34.8 percent in 2012.
Retail sales of the company's motorcycles in the United States and Canada, its No. 1 market, fell nearly 13 percent. Sales were also down in Europe, the Middle East and Africa.
Retail sales in Asia rose during the quarter, even in Japan, the company's single-largest overseas market, where the yen's weakness created a headwind for the company. Sales were also higher in Latin America, the company said.
Harley-Davidson said the year-over-year sales declines in the United States were weather-related. Last year, the country experienced a mild winter and an extremely warm spring, which boosted motorcycle retail sales early in the year. The company said it was optimistic that its endeavors to woe younger, non-traditional riders and increase its share of the motorcycle market would continue as it introduces bikes and pursues outreach programs specifically targeting non-traditional riders.
Like the company's restructuring, those efforts to win what Harley-Davidson calls "outreach customers" have helped drive its post-recession rebound.
According to Polk, a research firm that tracks the automotive and related industries, Harley-Davidson is the market share leader among riders ages 18-34, as well as women, African-Americans, Hispanics and Caucasian men 35 and older - its traditional riders.
During the first quarter, Harley-Davidson said it shipped 75,222 bikes worldwide, up 17.1 percent from a year ago. It is those shipments - rather than dealer retail sales - that drive the company's top line and provide a gauge of dealer expectations regarding future consumer demand.
But analysts said retail sales, which were a little shy of expectations, according to Ed Aaron at RBC Capital Markets, would ultimately have to start showing year-over-year improvement as well if Harley-Davidson is to meet its full-year forecasts.
"Shipments drive their quarterly performance," Morningstar's Jaime Katz said. "But shipments ultimately depend on retail units moving. They can't just keep filling the channel."
Harley said it expects to ship 259,000 to 264,000 motorcycles worldwide in 2013, sticking to the forecast it made earlier this year.
Harley-Davidson's shares rose about 3.5 percent, or $1.91, to $55.12 in morning New York Stock Exchange trading.
Comments
Comments are closed.