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Q1 profits in retreat

Without exception, developed-world motorcycle manufacturers on both sides of the Atlantic swallowed a common denominator of weaker revenue and falling profitability during the first quarter of 2024. So is the often premium-priced gravy train, upon which most of them rely, running out of steam? BDN financial editor Roger Willis crunched their numbers

After the relatively amazing amount of detail provided for its motorcycle division’s centenary full-year 2023 figures, BMW Group bean counters slammed their corporate desk lid firmly shut on any full explanation for distinctly disappointing Motorrad performance.
Revenue suffered a 6.5% decline to £750.5m. Associated operating profit plunged by 31.2% to £91.2m. Operating margin fell from 16.5% to 12.2%. Net profit sank further, 31.8% down to £64.5m. Quarterly BMW retail motorcycle and scooter sales worldwide retreated by a relatively modest 3.1% to 46,434 units.

A somewhat vague outlook reference predicting improved demand and an increase in deliveries to customers – tied to “full availability of models, including the R1300GS” – suggested that Q1 model mix had actually been fraught, hence the profitability slump. Additional information relating to motorcycle products, efficacious or otherwise, remained entirely absent.

Generalised warnings were flagged up, though. “The situation in the Middle East became increasingly volatile,” we were advised. “And it must be assumed that the threat posed in the Red Sea by Houthi militia will cause some logistical challenges. Our outlook does not account for any further escalation.”

BMW Group is evidently monitoring these developments and potential implications for its course of business from the war in Ukraine. “In view of growing unpredictability, actual macro-economic and geopolitical developments in some regions may deviate from expectations.” Well just fancy that. Sighs of relief all round from under-informed Motorrad dealers?
€-£ currency translation at forex rates applicable on 8 May

Along with fellow members of Volkswagen’s Brand Group Progressive portfolio of luxury marques, Ducati has been afflicted by logistics issues, supply challenges and weakening consumer demand. At least it missed out on some of the other woes assaulting Audi, Bentley and Lamborghini.

Revenue for the Bologna-based motorcycle manufacturer slumped by 18.9% to £224.2m. This was mainly attributed to shrivelling sales, especially in China. Resultant operating profit more than halved, 52.4% down to £23.1m. Operating margin sank from 17.8% to 10.5%.

Ducati’s overall global retail sales during the period fell by 16.2% to 12,394 units. Taken by volumetric deliveries to customers within each model segment, the Scrambler sub-brand was actually 21.3% up to 1423. But Naked/Sport Cruiser spanning Diavel, Monster and Streetfighter products, declined by 32.4% to 3401. Dual/Hyper, which includes the Hypermotard, Desert X and Multistrada ranges, incurred a 4.1% loss to 5604. Sport, encapsulating Supersport and Panigale Superbike kit, dropped by 28.5% to 1966.

Carving the geographical pie for deliveries, Europe accounted for 64%, rising from 61%. The USA took a 12% slice, up from 11%. But Chinese consumption (including Hong Kong) was cut in half, down to 3% from 6%. Other markets represented 21%, falling from 22%.

Quarterly Ducati motorcycle production was a fairly marginal 3.2% lower on 16,652 units. Scrambler slightly more than doubled to 1889, 105.1% up. Naked/Sport Cruiser fell by 26.8% to 4833. Dual/Hyper added 17.9% to 7051, while Sport was 22% down at 2879.
€-£ currency translation at forex rates applicable on 3 May

Although Harley’s results statement was slightly better than Wall Street analysts anticipated, virtually all of its percentage shifts went the wrong way. No surprise then, that investors slashed a savage 15.8% off its share price value on the day of announcement.

Consolidated revenue for the combined enterprises of Harley-Davidson Inc (HDI) suffered a 3.3% decline to £1.383bn. Quarterly HDI operating profit fell by 28.8% to £210.2m. Net profit attributable to HDI plunged by 22.7% to £187.8m.

Within that, turnover from motorcycles plus related products and services by the Harley-Davidson Motor Company (HDMC) was 5.2% down to £1.178bn. Associated operating profit dropped by 29% to £190.5m. Operating margin sank from 21.6% to 16.2%. An allegedly planned decrease in early-season motorcycle shipments and weak export sales largely took the blame, despite North American retail sales improving on the back of new touring bikes introduced at the end of January.

Revenue generated by consumer credit and dealer inventory funding arm Harley-Davidson Financial Services (HDFS) increased by 11.5% to £198.6m. However, HDFS operating profit fell by 7.8% to £43m. High interest rates and greater provision for loan defaults in the US domestic market, “relating to the current macro-economic environment”, were held responsible.

Harley’s LiveWire electric motorcycle spin-off, in which it has an overwhelming majority stake, delivered a 39% revenue slump to just £3.3m on unit sales rising by 85.7% to 117. That registered an operating loss of £23.3m, against a loss of £19.6m in Q1 last year.

Total Harley-Davidson branded motorcycle shipments to dealers worldwide in the quarter were 7.3% down to 57,672 units. The touring segment was 9.7% up to 35,356. Cruisers fell by 26.2% to 15,691. Sport/lightweight retreated by 24.6% to 6585. Adventure was 23.6% adrift on 1662.

Global retail sales were essentially flat, falling by a mere 20 units to 39,405. North America provided most of the meat and two veg, 5.6% up to 27,486. The EMEA region – principally Europe – was 11% down to 5264. Poor performance in Germany and France, as well as absent inventory of 2024 Street Glide and Road Glide models, were the reason. Asia Pacific was 12.3% in arrears on 6034. Latin America added 15 more machines to achieve its scant total of 621.

Harley supremo Jochen Zeitz, introduced these results by putting on a brave face, claiming this was “a good start to the year”. But his full-year 2024 outlook guidance said otherwise. He expects HDMC revenue to be flat or potentially 9% down. And HDMC operating margin will sink to somewhere between 12.6% and 13.6%. HDFS operating profit will either be flat or up by 5%.
$-£ currency translation at forex rates applicable on 29 April

Falling sales in Asian markets, plus the spectre of stockpiling to avoid Red Sea component supply-chain issues and electrification challenges, have wiped the smile off Piaggio Group’s corporate face.

Consolidated revenue fell by 21.3% to £368.3m. Operating profit was 7.8% down to £35.5m. However, operating margin improved from 8.2% to 9.7%. Pre-tax earnings were 22.5% lower at £24.3m and net profit also dropped by 22.5% to £16.1m. Net debt grew from £373.4m to £428.5m, in line with typical early-season working capital requirements.

Quarterly global unit sales during the period declined by 26.7% to 91,400 powered two-wheelers, blamed principally on reduced uptake in Asia. Turnover from PTWs was 24.1% down to £285.4m. That figure included spares and accessories, the revenue from which fell by 9.5% to £30m. Rebalancing of inventory by Piaggio’s worldwide distribution networks, in anticipation of new emissions laws, also had an impact on turnover.

Piaggio claimed a 19.6% share of the scooter segment in Europe during Q1 and further strengthening of its position on the North American scooter market to a 27.3% share – without providing supporting data. Also in North America, it says work is continuing to consolidate its motorcycle market presence through the Aprilia and Moto Guzzi brands – again lacking details.

In his outlook commentary, Piaggio Group managing director and chief executive Michele Colaninno, said: “The Far East has been showing signs of steadying and we expect to see a moderate improvement in sales during the year. Healthy signs of recovery are also emerging on the Indian market, the good performance of which will benefit from political stability after the elections there.”

He also highlighted “important investment plans in Italy for the coming years, so that we will be ready for the current energy transition”. This refers to a subsidised upgrade for Piaggio’s Pontedera plant, to produce all-electric PTWs. Finally, honing his obfuscation talents, Colaninno added: “Our decision for an intelligent verticalisation of the development and production of strategic assets will be the key for efficient management of new technologies.”
€-£ currency translation at forex rates applicable on 9 May


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