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Financial

29/01/2020

Harley-Davidson may be hopeful of a turnaround in its fortunes soon. But according to disappointing full-year results for 2019, the company’s definitely not there yet. BDN financial editor Roger Willis reports.

Annual turnover fell by 6.2% to £4.126bn. Within that, revenue from motorcycles and related products was 8% down to £3.519bn. However, revenue from the HDFS consumer credit and dealer inventory funding arm increased by 5.5% to £607.4m.

Consolidated operating profit from these two directions suffered a 22.1% decline to £427.5m. Net profit sank by 20.3% to £326m. Harley made a non-GAAP estimate that punitive US import tariffs on parts sourced in China and hugely higher retaliatory EU tariffs on bikes exported to Europe from America, as well as restructuring costs, had wiped £82.2m off its bottom line.

Worldwide wholesale shipments were reduced by 6.4% to 213,939 bikes. Deliveries to US dealer showrooms were 6.1% lower at 124,326 and international distribution was cut by 6.9% to 89,613.

Harley-Davidson stock planners did a pretty good job of matching inventory to demand, because global retail sales were 218,273, a 4.3% decrease but exceeding supply by a reasonable margin. Harley’s troubled US domestic market shrank again, 5.2% down at 125,960. Overseas retail action was also negative, sliding by 3% to 92,313.

Best news appeared in the Asia-Pacific region, where total sales grew by 2.7% to 29,513. Although developed markets in Australia, New Zealand, Japan and South Korea collectively posted a 3.7% decline to 17,753, the emerging nations of South-East Asia stacked on 14.2% to 11,760. Such success was attributable to Harley’s new plant in Thailand, which is now on-stream safely inside the ASEAN free trade zone.

This Thai facility is also supposed to have started shipping some EU tariff-dodging Harley models to Europe — upon which only 6% rather than 31% duties will be levied. But it hasn’t had any visible impact so far. European Harley sales were 6.6% down to 38,441. Elsewhere, Latin America fell by 3.9% to 9768 and Canada was 7.7% in arrears on 8946.

In a statement accompanying these results, Harley-Davidson chief executive Matt Levatich, pictured, was typically upbeat, promising investors more jam on their bread in the foreseeable future: “Our performance was in line with our expectations and indicative of increased business stability driven by the tremendous efforts of our employees and dealers. In 2019, we took important steps toward returning to significant growth in 2021 — including launching LiveWire, our first electric motorcycle, optimising our global dealer network and expanding our international footprint.”