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HARLEY FEELS THE PAIN

Pretty dreadful first-quarter 2020 results from Harley-Davidson nevertheless conceal the fact that much worse is yet to come, because the coronavirus pandemic only began to really slaughter its sales in March. BDN financial editor Roger Willis reports.

Total revenue for the period fell by 6.2% to £1.04bn. Turnover from motorcycles and related products was 8% down to £880.5m. Financial services revenue actually grew by 5.1% to £158.9m. Wholesale shipments to dealers worldwide declined by 10% to 52,973 bikes.

But earnings collapsed progressively. Operating profit from bikes, parts, accessories, apparel and other merchandise dropped by 22% to £67.7m. A 60.9% plunge for financial services delivered just £18.4m. Overall operating profit suffered a 35.7% dive to £86.1m. Net profit plummeted by 45.5% to £55.8m.

Total global retail motorcycle sales for the brand during Q1 finished 17.7% lower at 40,438. Its US domestic market had been 6.6% up through January and February to mid-March, when it ground to an abrupt halt just as the season should have been getting into full swing. The eventual tally of 23,732 was 15.5% down. International markets lost 20.7% on 16,707.

In detail, European Harley dealers sold 6534 bikes, 30.7% fewer than in Q1 last year. The EMEA region in which they reside was 28.4% lower on 7730. Asia-Pacific performance was a comparatively modest 5.3% down to 5752. Latin America retreated by 21.5% to 1759 and Canada by 24.7% to 1466.

The results statement was preceded by a blizard of gung-ho waffle stretching to more than a thousand words from Harley-Davidson’s new chairman and acting chief executive Jochen Zeitz, most of it geared to placating shareholders and bolstering the company’s feeble stock valuation. This culminated in a promised “Rewire” initiative leading to a radical repositioning and reinvigoration of the brand. Further information about this will be made available in Q2. Meanwhile, enjoy a taster of his thrusting corporate prose.

“Covid-19 has dramatically changed our business environment and it is critical we respond with agility to this new reality,” Zeitz proclaimed. “The crisis has provided an opportunity to re-evaluate every aspect of our business and strategic plan. We have determined that we need to make significant changes to the company — to our priorities, to our operating model and to our strategy — to drive more consistent performance as we emerge from this crisis. We will reduce complexity, sharpen focus and increase the speed of decision-making. These efforts will pave the way for a new strategic plan that incorporates some key products and initiatives from the current plan but focuses on improved profitability and long-term growth. As a result, we will emerge as a stronger and more efficient company and reignite the Harley-Davidson soul.”     

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