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HARD TIMES AT HARLEY

Harley-Davidson has revealed yet another set of declining bike sales, revenue and profit figures in full-year results for 2017 — and reacted by announcing the closure of its Kansas City assembly plant to cut costs. BDN financial editor Roger Willis reports.

Annual revenue fell by 5.8% to £3.996bn. Operating profit was 15% down at £630.6m. Net profit plunged by 24.6% to £369.2m. Wholesale inventory output during the year decreased by 7.9% to 241,498 bikes. US dealers received 10.5% fewer at 144,893. International distribution shrank by 3.8% to 96,605.    

The brand’s global retail motorcycle sales in 2017 dropped by 6.7% to 242,788. US sales were 8.5% down to 147,972. International lost 3.9% at 94,816. Across bigger players, the EMEA region was 2% lower on 44,935 — although Europe alone was just 0.4% down to 39,773. Asia Pacific lost 7.7% to 30,348.    

Revenue in the final three months was 10.7% up to £865.3m and operating profit climbed by 46.2% to £71.8m, driven by an 11.3% seasonal wholesale shipment surge. But quarterly net profit collapsed, plummeting by 82.4% to a mere £5.9m. The company attributed this lamentable bottom line in part to an additional £37.6m income tax hit from President Trump’s fiscal reforms and a £20.8m product recall charge.

Harley-Davidson’s immediate response to such unremitting bad news was a “multi-year manufacturing optimisation initiative”. Put bluntly, Harley intends to wind down and close its assembly plant in Kansas City, Missouri, transferring production to the older assembly operation in York, Pennsylvania. This will involve exit costs of about £140m and a £50m capital investment over two years, and hopefully deliver annual savings of around £50m from 2020 onwards.

Commenting on this move, Harley supremo Matt Levatich said: “The decision to consolidate our final assembly plants was made after careful consideration of our manufacturing footprint and appropriate capacity given the current business environment.” In other words, he doesn’t expect demand to improve any time soon.    

Harley grasps at electric straws
 

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