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CHICAGO, April 21 (Reuters) - A strong U.S. dollar allowed Harley-Davidson Inc’s foreign competitors to aggressively undercut its prices in the first quarter, the iconic motorcycle maker said on Tuesday, hurting sales and prompting it to lower 2015 shipment forecasts.
The news sent the company’s shares down more than 9 percent in early trading.
Milwaukee, Wisconsin-based Harley-Davidson said the discounting had primarily affected sales in the United States, where it does most of its business. Executives said on a conference call that the company’s U.S. market share had slipped close to 5 percentage points to 51.3 percent in the quarter as competitors offered discounts of up to $3,000 per bike and slashed their suggested retail prices by up to 25 percent.
Honda Motor Co Ltd and Suzuki Motor Corp both currently offer $1,000 cash-backs on selected models. Suzuki has cut the suggested retail price on 13 models and Honda is offering low financing.
Discounts like these have been “enabled by a dramatic shift in world currencies”, Chief Financial Officer John Olin said on the call with analysts. “This is going to continue for some time as they work through what we consider to be excessive inventory.”
“We are not going to discount,” Olin told analysts.
The company said that the second quarter will be its weakest of the year as the full impact of the strong dollar hits home.
Harley-Davidson posted a quarterly net profit of $269.9 million, or $1.27 per share, for the first quarter, up 1.5 percent from $265.9 million, or $1.21 per share, a year earlier.
Analysts had expected earnings per share for the quarter of $1.25.
Revenue dipped to $1.67 billion from $1.73 billion a year earlier. That came in above analysts’ expectations of $1.58 billion.
Harley-Davidson’s worldwide retail sales fell 1.1 percent to 56,661 motorcycles from 57,415 in the first quarter of 2014. Sales in its key U.S. market fell 0.7 percent to 35,488 from 35,730.
Harley-Davidson said it now expects motorcycle shipments to rise by about 2 percent to 4 percent in 2015, down from its previous forecast of about 4 percent to 6 percent growth.
In the second quarter, the company expects to ship between 83,000 to 88,000 motorcycles, down from 92,217 shipped in the same quarter in 2014.
In early trading, Harley-Davidson shares were down 9.3 percent at $56. (Reporting By Nick Carey, Editing by Franklin Paul, W Simon and Peter Galloway)