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PAINFUL FIRST QUARTER FOR HARLEY

Harley-Davidson’s first-quarter results to 31 March were a sob story of almost entirely unremitting decline, reports BDN financial editor Roger Willis.

Revenue purely from motorcycles was 16.5% down to £863.6m. When related products — parts, accessories, apparel and other branded merchandise — were added in, combined revenue fell by 15.7% to £1.04bn. Associated operating profit dropped by 28.2% to £187.6m. Operating margin deteriorated from 21.1% to 18%. HDFS, the company’s consumer credit and dealer inventory funding arm, posted flat revenue of £136m with sector operating profit falling by 6.6% to £41.3m.

Total turnover fell by 14.2% to £1.18bn. Group operating profit was 25% down at £228.9m and net profit sank by 25.6% to £146.4m. During the period, wholesale shipments to dealers worldwide were 14.7% lower, comprising 70,831 bikes. Of these, 45,784 went into the US market, a 20.6% reduction. International shipments were 1.4% down, at 25,047.

Global retail volume over the three months decreased by 4.2% to 55,049 units. US domestic deliveries, as the majority element, were 5.7% down at 33,316. In mitigation, Harley said that its market share in the over-601cc segment had increased slightly to 51.3%.

International sales fared better, losing just 1.8% to 21,733 units. Europe was Harley’s biggest export market, 1.6% up on 8984. Latin America was the only other positive area, growing by 24.2%, albeit to a modest tally of 2342. Elsewhere, figures were remorselessly negative. The Asia Pacific region dropped by 9.3% to 6863. And, within that, Japan suffered a 5.7% retreat to 1986. Canada was 4.4% down to 2361. The Middle East and Africa posted a 13.3% fall to 1183.

A master of dead-pan spin, Harley-Davidson chief executive Matt Levatich, pictured, blithely brushed off such misfortune. “First-quarter US retail sales were in line with our projections and we remain confident in our full-year plan,” he mused. “We are very pleased with our continued growth in US market share and the progress our US dealers made in reducing their inventory of 2016 motorcycles in the quarter.” In conclusion, he said: “We are energised by our focused strategy. And we believe our powerful brand and commitment to excellence will position us to drive demand for our products and grow our sport.”

Objectives in Harley’s long-term strategy covering the next 10 years include recruiting two million new customers in the US, expanding international business to half of annual production and launching 100 “high-impact” new models.     

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