Harley-Davidson posts higher profit as U.S. demand rebounds
CHICAGO (Reuters) - Harley-Davidson Inc (HOG.N) posted higher quarterly profit on Thursday, lifted in part by a modest rebound in demand for its motorcycles in the United States, its No. 1 market.
But the Milwaukee-based company stuck by its forecast for annual motorcycle shipments, suggesting sentiment among would-be buyers remained cautious and that the bike maker does not anticipate a late surge in demand in the third quarter, the tail end of its traditional selling season.
Harley-Davidson continues to expect to ship 259,000 to 264,000 of its motorcycles to dealers worldwide in 2013, up from 247,625 bikes in 2012 and 233,117 in 2011.
The company's annual worldwide motorcycle shipment levels peaked at about 350,000 units in 2006, right before the U.S. housing bubble burst and consumer demand for its bikes - which range in price from $8,000 to more than $30,000 - plummeted along with the broader economy.
Harley-Davidson's second-quarter profit rose to $271.7 million, or $1.21 a share, from $247.3 million, or $1.07 a share, a year ago.
The results were better than expected. Analysts, on average, expected the company to report a profit of $1.18, according to Reuters Estimates.
Sales and revenue rose just 3.4 percent to $1.79 billion.
Harley-Davidson said its independent dealers sold 90,193 new motorcycles in the second quarter, up from 85,714 bikes in the same period a year ago.
Sales in the United States, where the company sells more than one-half of its products, were up 4.4 percent.
Profit rose more than sales, the company said, thanks to a 100 basis point improvement in gross margins, which was 36.9 percent in the second quarter from 35.9 percent a year earlier.
The operating margin in the sales of motorcycles and parts jumped 220 basis points to 21.9 percent, compared with 19.7 percent last year.
The gains reflected the company's four-year-long effort to lower manufacturing costs though flexible work deals with its unions and other changes in the way it makes its bikes.
Second-quarter earnings also got a lift from the company's decision to reverse part of its restructuring plan and keep a wheel-making plant in Australia open rather than close it and move the operation to China.
The decision allowed Harley-Davidson to reverse previously expensed exit and layoff costs. As a result, it booked a benefit of $5.3 million this quarter from its restructuring, compared with a restructuring expense of $6.2 million in the year-ago quarter.
Harley-Davidson said when the restructuring program, which is expected to cost a total of $485 million, is completed at the end of this year, it will save the company $320 million a year.
(Editing by Jeffrey Benkoe)
- Malaysian jetliner may have turned back before vanishing |
- Malaysian plane presumed crashed; questions over false IDs |
- Radar showed missing plane may have turned back: Malaysia military
- Malaysian jet's disappearance among rarest of aviation disasters