* Fourth-quarter earnings meet expectations
* Guidance suggests another strong year of sales
* Shares slide after early gains
By James B. Kelleher
Jan 30 Harley-Davidson Inc posted a
higher quarterly profit on Thursday, lifted by growing global
motorcycle sales, while its preliminary 2014 shipment forecast
suggested its efforts to reach non-traditional riders will
continue to gain traction.
The results initially sent its shares up as much as 4
percent in trading on the New York Stock Exchange, before they
gave up those gains to trade down 0.6 percent at $63.65.
The Milwaukee-based company posted a fourth-quarter net
profit of $75.4 million, or 34 cents a share, up from $70.6
million, or 31 cents a share, last year.
Overall revenue from bikes, parts and accessories, financial
services and apparel rose 1.5 percent to $1.2 billion,
Analysts, on average, expected the company to report a
profit of 34 cents a share on sales of $1.04 billion.
The company said it expects shipments to dealers to rise
between 7 percent and 9 percent to 279,000 to 284,000
motorcycles in 2014.
Jaime Katz, an analyst at Morningstar, said the shipment
guidance was "pretty good for a mature business".
She said it suggested the company expects double-digit sales
gains among customers outside its core demographic group of
white males over 50 years of age.
Harley-Davidson has long known its reliance on an
overwhelmingly white, male and middle-aged consumer base would
ultimately challenge sales in North America, where it still
earns two-thirds of its revenue.
That so-called "baby boomer" cohort is growing at a
So in recent years, the company has aggressively courted
non-core customers - young adults, women, African-American and
Hispanic riders - with a variety of new designs.
This spring, the motorcycle maker's dealers in the United
States, Canada, Italy, Spain, Portugal, and India will begin
selling Harley-Davidson's new line of lighter, more affordable
motorcycles - the Street 500 and the Street 750.
The bike is its first foray into the smaller motorcycle
market in nearly 40 years, and Harley-Davidson's effort to win
over these outreach customers appear to be working.
According to RL Polk, a leading provider of auto industry
data, Harley-Davidson has been the market leader among riders
ages 18-to-34, as well as women, African-Americans and
Hispanics, for five years running.
Harley-Davidson, which sells its bikes through a global
network of about 1,500 independent dealers and distributors,
said it shipped 46,618 motorcycles to dealers during the
quarter, down from 47,067 in the year-ago period.
Fourth-quarter shipments are often weak because it marks the
beginning of the winter season in the United States, where
Harley-Davidson derives two-thirds of its sales.
But consumer demand at the retail levels rose during the
fourth quarter and dealer retail motorcycle sales were up nearly
6 percent. Sales rose in every region except Latin America,
where they fell nearly 3 percent, the company said.
Harley-Davidson said issues getting the company's new bikes
certified for sale in Brazil accounted for that decline.
Harley-Davidson's annual worldwide shipment levels peaked at
about 350,000 units in 2006, right before the U.S. housing
Consumer demand for its motorcycles, which are priced from
$8,000 to more than $30,000, tumbled along with the broader
It only bottomed out in 2010, when Harley-Davidson shipped
210,494 bikes to dealers - 40 percent fewer than it did just
four years before.
The company responded to the sharp downturn with a
wide-ranging restructuring program that - among other things -
squeezed wage concessions from its unionized workers in
Milwaukee, Kansas City, Missouri and York, Pennsylvania.
It also saw it drop non-core motorcycle brands, including
Buell and MV Agusta.
Those concessions, and the adoption of a "surge
manufacturing" work schedule, which permits Harley-Davidson to
bring on workers during seasonally strong quarters and lay them
off during slower quarters, saved it $310 million in 2013.