Harley-Davidson Lifts Profit Amid Turnaround Push -- Update
October 27 2020 - 8:42AM
Dow Jones News
By Micah Maidenberg
Harley-Davidson Inc. reported a stronger third-quarter profit
and beat expectations for revenue tied its motorcycles as it looks
to refocus on a narrower set of markets under a new chief
executive.
The motorcycle manufacturer on Tuesday said it would exit 39
weaker-performing markets and move to a distributor model in 17
others, including in India.
Harley said it struck a deal with Hero MotoCorp for India under
which the latter company will sell and service its bikes. The
company also said it agreed to a licensing deal with Hero that will
allow it to develop and sell motorcycles under the Harley-Davidson
brand.
Meanwhile, Milwaukee-based Harley has identified three dozen
other markets it believes offer stronger prospects.
Shares of Harley rose 7.6% in premarket trading.
Harley has been trying to stoke stronger demand from a broader
set of consumers by rolling out new products like an electric sport
bicycle, concentrating efforts on more-established markets and
appointing Jochen Zeitz to lead the company as chief executive in
May.
Mr. Zeitz has said he wants to avoid oversupplying markets with
motorcycles and get customers to pay full price for its
motorcycles.
Dealer inventories globally were down more than 30% in the third
quarter compared with a year earlier, the company said.
Retail-level motorcycle sales fell 8% globally in the third
quarter, reflecting in part a shift in when it launches new-model
bikes. Sales were down 10% in the U.S., the company's largest
market, but rose 7% in the region including Europe.
Harley said net income rose to $120.2 million, or 78 cents a
share, compared with $86.6 million, or 55 a share, for the
year-earlier period. Harley's adjusted profit increased to $1.05 a
share, ahead of what analysts were expecting for that metric,
according to FactSet.
The company has also been cutting jobs, laying off about 10% of
its workforce around the world.
For the third quarter, selling, administrative and general
expenses were down 26%, according to the company.
Harley said it generated $964 million in revenue from
motorcycles and related products for its quarter that ended Sept.
27, down from $1.07 billion for the year-earlier period but more
than the $844 million consensus estimate for that figure, according
to FactSet.
Earlier this year, Milwaukee-based Harley closed factories for
two months as the coronavirus spread, complicating the company's
efforts to meet consumer interest for motorcycles over the summer
caused by the pandemic. Harley also pulled back on production after
plants restarted to keep too many bikes from becoming available on
the market.
Write to Micah Maidenberg at micah.maidenberg@wsj.com
(END) Dow Jones Newswires
October 27, 2020 08:27 ET (12:27 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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