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HARLEY DROWNING IN RED INK

As anticipated against a Coronavirus-hued background, Harley-Davidson’s Q2 and half-year results were utterly grim. But investors no doubt took a quantum of solace in fresh details of ruthless “Rewire” turnaround tactics from enigmatic new Teutonic supremo Jochen Zeitz. BDN financial editor Roger Willis reports.

Total six-monthly revenue fell by 28.3% to £1.68bn. The company therefore plunged to an operating loss of £6.7m, versus an operating profit of £328.7m in the same period last year. That delivered a net loss of £17.5m, against a fairly thin first-half net profit of £251m in 2019.

Respective second-quarter operating and net losses of £90.1m and £71.5m, when  the pandemic’s initial impact was at its most severe, more than wiped out already-weak first-quarter gains.

Half-yearly worldwide wholesale motorcycle shipments to Harley dealers were 36.3% down to 81,300. Global retail bike sales volume for the brand slumped by 23% to 93,151.

US domestic sales were 22.7% lower at 55,072. European numbers dropped by 29.2% to 16,272. The EMEA region as a whole lost an identical proportion on 18,694. Asia Pacific in its entirety sank by a comparatively modest 8% to 12,640. Within that, the developed markets of Japan, Australia, New Zealand and South Korea accounted for 8073, just 3.1% in arrears. Emerging areas in South-East Asia, supplied from Harley’s ASEAN tariff-busting plant in Thailand, were harder hit, losing 15.6% on 4567.

Elsewhere, Canadian sales retreated by 28.2% to 3753. In Latin America, where Covid-19 is ravaging Brazil in particular, volume fell by 37.1% to 2992.

Shrugging off this infected data, Harley chairman and chief executive Zeitz concentrated on the progress of his blitzkrieg. “I’m very pleased with our accomplishments in these times of extraordinary challenges and uncertainty,” he told shareholders. “Through all of this, we have made significant progress toward the goals of The Rewire. The positive feedback from key stakeholders and the early impacts we are seeing in the marketplace are very encouraging.”

Some expansion of Rewire’s reach was included in the results statement. Apart from his previously-announced culling of the ranks of Harley’s overpaid and under-achieving management, as Zeitz pushes for tighter costs and much faster decision-making, a range reduction is apparently on the cards. The spread of models is set to be “streamlined” by up to 30%, to eliminate dust-gatherers, with an onus instead on lucrative individualised customisation via the copious Harley P&A catalogue. However, a putative step out of cruiser comfort zone into the adventure market will proceed and Harley’s Pan America 1250 is due for roll-out in 2021.

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