Harley-Davidson Inc beat expectations for profit on Tuesday and stuck to its full-year shipment forecast, allaying fears of another major hit from European import tariffs and a further slump in sales in its main US market.
Shares of the company rose as much as 8.8 per cent to US$40.36, as it posted the first rise in international sales in a year during the third quarter and a 3.6 per cent dip in US retail motorcycle sales - the smallest decline in nearly three years.
Profits continued to sink - by 24 per cent - but the results offered some hope that one of the biggest names in motorcycles was finally beginning to arrest a slide in global sales that it has been fighting for years.
Sales in the world’s biggest motorcycle markets in Asia, which Harley has targeted with smaller bikes that go against its traditional profile, rose 8.7 per cent in the quarter and are up about 1.6 per cent this year overall.
The company plans to source half of its revenue from overseas by 2027 and international retail sales rose 2.7 per cent to 23,619 motorcycle in the quarter.
While worldwide shipments fell 5.8 per cent to 45,837 motorcycles, they topped analysts’ estimates by over 1,000 motorcycles, and the Milwaukee, Wisconsin-based company stuck to its 2019 shipment target of 212,000 to 217,000 bikes.
“As we look to the remainder of 2019, we are encouraged by the momentum of retail sales trends through the first nine months of this year but also recognize substantial headwinds that we continue to face,” Chief Financial Officer John Olin said.
The company is also cutting spending and said it now expects 2019 capital expenses of US$205 million to US$225 million, about US$20 million less than its previous estimates.
Excluding items, the company earned 70 cents per share, beating Wall Street expectations of 52 cents while revenue from motorcycles and related products overall fell 4.9 per cent to US$1.07 billion.
TARIFF HIT DOUBLES
The company, which has been criticized by President Donald Trump for its plan to shift some US production overseas, has also been battling the effects of trade tensions on its business globally.
Harley said on Tuesday retaliatory import duties imposed by the European Union and China on its bikes would cost the company about US$105 million in 2019, up from its prior estimate of US$100, with about US$90 million of the hit coming from EU tariffs.
Brussels in June raised import duties on US-manufactured Harley bikes to 31 per cent from 6 per cent, and the company said the impact from tariffs more than doubled in the third quarter from a year ago to US$21.6 million.
In response, Harley plans to begin shipping bikes from its Thailand plant but a delay in regulatory approval from the trading bloc means it will not see any benefit in earnings before the second quarter of 2020. -- Reuters