Kicking off the 2023 corporate reporting season with a relatively robust set of first-quarter numbers, there are still a lot of unanswered questions in Harley-Davidson’s future. BDN financial editor Roger Willis reports.
Total quarterly revenue grew by 19.6% to £1.435bn. The primary constituent was a 20.5% rise in turnover from motorcycles and related products to £1.25bn. The HDFS consumer credit and dealer inventory funding arm’s revenue contribution put on 16.2% to £179.1m. Input from Harley’s LiveWire electric bike spin-off added £6.2m, a notional annualised decline of 25.4%.
Commenting on these figures, chairman and chief executive Jochen Zeitz said: “Harley-Davidson delivered a solid start to the year with consolidated first quarter revenue reflecting the progress we continue to make in advancing our Hardwire strategic plan.”
Overall operating profit rose by 27.8% to £296.3m. Within that, income from motorcycles and related products was 53.4% up to £269.1m. But HDFS profitability slumped by 32.4% to £46.9m, owing to higher borrowing costs and POS bad debts. Such loan defaults were ostensibly caused by several unidentified factors relating to the “current macro environment”. LiveWire incurred an operating loss of £19.7m, worsening from a booked loss of £12.8m in the same period last year.
However, net profit stacked on 36.7% to £243.9m, so Jochen Zeitz was a happy bunny on behalf of fellow stakeholders. Although Harley’s share price initially plunged by more than 6% when the results were announced, it almost completely recovered in the full session’s trading.
Of course, much of this good news had been based on banking an early-season Q1 surge in wholesale shipments, which were 13.7% up to 62,237 units, to boost dealer inventories worldwide. Global retail sales were less enticing, 12.5% down at 39,425, with a variety of excuses on tap.
US domestic retail performance fell sharply by 17.3% to 24,277. This was blamed on the timing of new product launches, as well as somewhat amorphous “shifting macro conditions”. Sales in adjacent Canada were a more modest 6.7% lower at 1744, which sounds like an acceptable result given Canucks often still have snow on their boots during much of the three months in contention.
The EMEA region, which predominantly means the whole of Europe and was Harley’s biggest export market for many years, sank by 5.9% to a fairly pathetic 5917 bikes leaving showrooms. According to available excuses, this was primarily driven by market exits, in addition to a planned unit mix shift towards the profitable core product segments, following “sunsetting” of the late and unlamented Sportster range.
Latin America in its entirety shifted only 606 machines to paying customers, a 25.1% reduction, thanks to being adversely impacted by tough regional economic conditions. And then alleged growth in Asia-Pacific countries — of a minimal 2.7% to 6881 motorcycles — was hailed as continuing strong demand across key markets, including Japan and Australia.
For its full-year 2023 forecast, Harley has reaffirmed previous guidance and continues to expect revenue growth of 4% to 7% from motorcycles and related products, and an operating margin of 14.1% to 14.6%. But the HDFS funding arm’s operating profit is set to decline by somewhere between 20% to 25%. LiveWire electric motorcycle sales are likely to be in a broad range of 750 to 2000 units, with an annual operating loss of about £90m to £100m.
$-£ currency translation at forex rates applicable on 28 April