The first three motorcycle industry candidates armed with full-year 2023 results data have formed an orderly queue – Yamaha, Harley-Davidson and Pierer Mobility – ready for adulation or otherwise. Performance differences are stark.
YAMAHA: THE GOOD
Yamaha’s motorcycle business has prospered mightily since the pandemic and, according to impressive full-year 2023 results, overcome virtually all obstacles – apart from those of its own making.
Twelve-monthly revenue boasted a 9% rise to £7.453bn. Asia was the biggest contributor, 7.4% up to £4.452bn. Developed markets together put on 9.7% to £1.875bn. Within major players, Europe led the way, adding 14.4% to £1.15bn. North American turnover grew by 22.1% to £400.1m. Japan fell by 19.3% to £236.2m. Latin America and other regions combined were responsible for a 14.6% increase to £1.126bn.
Associated overall operating profit climbed by 44.3% to £646.8m. Operating margin improved from 6.6% to 8.7%. Yamaha repeated a previous revelation made earlier in its fiscal year too, that passing on prices (ie inflation) to end-users had led to higher net sales and profits. Well fancy that! A lesson learned.
Global motorcycle unit sales volume was just 1.1% up to 4.827 million. Asia was 1.5% higher at 3.883 million, thanks to strong demand in Indonesia and India. However, Asian volume was constrained by economic downturns in Vietnam, China and Thailand, although premium-spec bikes mitigated financial impact in some emerging markets. European volume grew by 5% to 209,000. North America was 11.7% up to 76,000, while Japanese domestic sales declined by 20% to 76,000. Volume in other unspecified regions was flat, retreating by 0.5% to 583,000.
In its 2024 forecasts, Yamaha promises much of the same. Annual revenue is expected to grow by 6.5% to £7.939bn. Asia should advance by 4.1% to £4.636bn. Developed markets will hopefully creep upwards by 2.5% to £1.921bn. Latin America and those pesky other regions are scheduled to roar ahead by 22.7% to £1.381bn. Worldwide unit sales volume is anticipated to put on 2.9% to 4.966 million. But then there’s a sting in the tail. Full-year operating profit is set to fall by 5.9% to £608.7m, on the back of substantially greater sales promotion costs. Here’s betting beancounters at Yamaha Motor’s Iwata HQ make that menace disappear before next December.
HARLEY-DAVIDSON: THE BAD
Harley-Davidson’s gradual downward trend seems unstoppable, as yet another scratchy full-year result evidenced. At a glance, Harley-Davidson consolidated net revenue for 2023 was narrowly positive, 1.6% up to £4.576bn. But the main HDMC entity producing motorcycles and related parts, accessories, etc, was actually 0.9% down year-on-year at £3.824bn. However, Harley’s HDFS consumer credit and dealer inventory funding arm grew its revenue by 16.2% to £752.5m, neatly bridging the gap.
HDMC operating profit copped a 2.4% decline to £521.6m. Then a £92.1m operating loss from Harley’s stumbling LiveWire electric bike subsidiary had to be factored in. And HDFS operating profit unfortunately plunged by 26.1% to £185.2m. Higher interest rate expenses and an abruptly increased provision for credit losses, relating to the currently abysmal macro-economic environment, took the blame for putting a spanner in its money-lending works. Eventual combined operating profit finished 14.3% down on £614.3m. Finally, net profit was 4.7% in arrears to £557.3m. A satisfactory outcome? Probably not.
As for wholesale shipments to dealers worldwide during the 12 months in question, output slumped by 7% to 179,984 motorcycles. “Grand American Touring” models, including new CVO kit, was 3.2% up to 92,683. “Cruiser” grew too, rising by 8.4% to 63,945. “Sport and Lightweight” took a 46.2% dive to 18,228. And “Adventure Touring”, represented by the solitary Pan America, more than halved to just 5128 bikes shipped. Separately, LiveWire electric shipments rose by 10.6% to 660 machines as the new Del Mar middle-weight arrived.
Harley’s global retail sales declined in almost every market during 2023. US domestic volume fell by 9.8% to 98,468 units. Canada was 6.3% down to 7422. The EMEA region (mainly Europe) went backwards by 11.5% to 27,005. Asia Pacific had a 3.4% retreat to 26,953. Latin America enjoyed the dubious stardom of adding just one more bike, taking its tally to 2923.
Exercising his right to address investors with the longest sentence to match his longest corporate title, Harley-Davidson chairman, president and chief executive officer Jochen Zeitz said: “In the third year of our Hardwire strategic plan, we have made progress in key elements, focusing on our most profitable products and markets, which we believe will continue to yield benefits to the business and have set us up for long-term value creation, despite the current challenging environment for the industry.”
PIERER MOBILITY: THE UGLY
While KTM, Husqvarna and GasGas parent Pierer Mobility can still claim to be Europe’s largest motorcycle manufacturer, full-year preliminary results for 2023 illustrated a veritable nightmare.
On the upbeat side, Pierer achieved a 9.2% consolidated revenue increase to a record £2.271bn, mainly driven by its motorcycle segment. And unit sales of motorcycle brands now in the Pierer portfolio rose by 1.6% to 381,555.
But the cost of motorcycle dealer inventories, despite strong demand, climbed sharply due to grievously higher interest rates. So extended payment terms and greater discounts had to be granted to support both dealers and suppliers, swallowing liquidity reserves. The associated negative impact on free cash flow reached £350.8m, up from just £2.6m in 2022. This situation was then compounded by a previously-reported implosion of the pedal bicycle and e-bicycle markets, in which Pierer had been heavily involved, leading to an exit from the former and restructuring for the latter.
Combined consequences of these events were a 32% decline in Pierer Mobility’s annual operating profit to £136.6m and overall operating margin falling to 6%. The motorcycle segment maintained a margin of about 9%, though. Pre-tax profit dived by a savage 57.3% to £78.6m. Net earnings have yet to be defined in fully audited results.
On a brighter note, Pierer’s wholly-owned motorcycle brand sales comprised 280,206 KTM products, 67,462 from Husqvarna and 29,532 from GasGas. In addition, its European distribution network also sold 1852 MV Agusta machines and 2503 from Chinese partner CFMoto.
Overall European sales were about 15% up to approximately 140,000 motorcycles and around 240,000 were sold outside Europe. Of these, Pierer’s North American subsidiary managed to sell more than 100,000 bikes for a second consecutive year. And Australia, including New Zealand, shifted 19.700. The Indian market, supplied by Pierer’s production partner Bajaj Auto, accounted for almost 66,000 KTM and Husqvarna motorcycles.
As previously reported in BDN, Pierer Mobility intends to overcome recent difficulties with a focus on core powered two-wheeler business – motorcycles and e-bicycles – in its 2024 financial year. Specifically, this will centre on the KTM, Husqvarna, GasGas and MV Agusta brands. And in order to recover profitability, the group will implement significant cost-cutting measures, including a reduction in employee headcount at Mattighofen and Munderfing operations in Austria, while transferring some R&D activities to strategic partners Bajaj Auto and CFMoto, respectively based in India and China.
Sterling currency translations, respectively from Japanese yen, US dollars and euros, were made at forex rates applicable in early February.