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HomeNEWSFINANCIALSTRONG PROFIT GROWTH FOR HARLEY DESPITE FLAT SALES

STRONG PROFIT GROWTH FOR HARLEY DESPITE FLAT SALES

Harley-Davidson’s second-quarter financial results to 30 June confirm recent investment analyst research that it is suffering from weaker unit sales than anticipated. Nevertheless, its bottom line remains impressive.

Revenue from motorcycles and related products in the period rose by 12.4 per cent to £1.01bn. Associated operating profit increased by a muscular 32.3 per cent to £276.8m. Financial services revenue grew by 2.2 per cent to £97.5m, with an operating profit contribution from that sector up by a marginal 0.3 per cent at £43.6m.

Overall operating profit for the three months improved by 26.8 per cent to £321m. Net profit climbed by 30.4 per cent to £207.6m.

However, retail motorcycle sales volume was almost dead flat. Harley’s global dealer network shifted 90,218 bikes, a microscopic improvement of only 0.03 percent or precisely 25 units. US domestic sales were equally disappointing, with a fractional descent by 16 units to 58,225 bikes.

“US retail sales fell short of our expectations in the second quarter,” admitted Harley chairman, president and chief executive Keith Wandell, blaming this lacklustre performance on prolonged poor weather across parts of the US and soft Sportster sales ahead of the company’s new smaller-capacity Street range arriving in showrooms. He made no comment about a reported delay in wholesale Street shipments, which only began to reach dealers in late June.

International markets, taken together, were no better. Overall export sales prospered by a mere 0.1 per cent to 31,993 bikes, an extra 41 units. Europe stacked on seven per cent and the Asia-Pacific region added 1.5 per cent. But Latin America and Canada saw double-digit declines, respectively by 10.4 per cent and 18 per cent.

As a result, Harley has reduced its forecast maximum annual wholesale shipment growth substantially to 5.5 per cent, against a previous prediction of nine per cent. It now expects to deliver up to 275,000 motorcycles into dealerships worldwide, replacing a more ambitious target of 284,000 machines.

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