(FILES) This file photo taken on November 14, 2014 shows Katie Brierton cleaning the prototype of the Harley-Davidson electric motorcycle called the 'Live Wire' at the Progressive International Motorcycle Show in Long Beach, California. The US National Highway Traffic Safety Administration said on July 8, 2016, it is investigating complaints of brake failures on Harley-Davidson motorcycles that have resulted in reports of three crashes and two injuries. / AFP PHOTO / MARK RALSTON
MILWAUKEE: Harley-Davidson Inc on Thursday said a decrease in total sales and soft domestic demand lowered second-quarter profit and has led the company to trim its forecast for motorcycle shipments in 2016.
Company executives said they were surprised by US industry weakness.
“We did not expect the industry as a whole would be as soft as it is. While our (market) share gains helped to blunt the full impact of this weak market, lacklustre industry sales have had a significant impact on our results and our forward expectations,” chief executive Matt Levatich said during a conference call with analysts.
Levatich said uncertainty about the political environment and consumer credit conditions, combined with slower sales in oil dependant regions around the country, contributed to a softer-than-expected US market for motorcycles.
Harley-Davidson’s US market share in the quarter was 49.5%, up 2.0 points from a year ago.
Harley-Davidson’s domestic sales fell 5.2% in the quarter, while US motorcycle industry sales overall dropped 8.6% in the same period.
The company cut its 2016 full-year outlook for motorcycle shipments to a range of 264,000 to 269,000 motorcycles. It previously estimated shipments of 269,000 to 274,000 motorcycles.
Given the weakness of US sales and planned factory downtime in July to upgrade computer systems, year-end US retail inventory will be flat year over year, chief financial officer John Olin said.
International sales increased by 4.3% from a year ago, with the largest gain, 8.2%, in the Europe, Middle East and Africa region. The impact of Britain’s vote to leave the European Union on the company’s international sales is unclear, Olin said.
“What we are certain of is Brexit does not provide any benefit to retail sales or consumer confidence in Europe,” Olin said.
Olin also said the company would not respond to speculation that the it was a takeover target, which moved its share price up earlier this month.
“We don’t comment on stock market rumors - that would consume our entire life if we did,” Olin said.
Harley’s shares were up 0.65% at US$50.91 on Thursday.
Second-quarter earnings per share increased to US$1.55 from US$1.44 a year ago, topping analysts’ expectations of US$1.53.
The Milwaukee-based company said net income fell to US$280.4mil (RM1.14bil) from US$299.8mil (RM1.22bil) a year ago.
Revenue was US$1.86bil, up slightly from US$1.82bil a year earlier.
Analysts, on average, were estimating US$1.67bil, according to Thomson Reuters I/B/E/S. - Reuters
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