A Harley-Davidson customised fuel tank is displayed in their head office in Singapore October 13, 2016. REUTERS/Edgar Su
BENGALURU: Harley-Davidson Inc said motorcycle shipments for 2016 fell short of its estimates, citing tough global competition, and the company forecast shipments for this year to be flat to down modestly.
The Milwaukee-based company’s shares fell about 5% to US$55.00 in premarket trading on Tuesday.
Harley, which commands about half the US big-bike market, said it expects to ship 66,000-71,000 motorcycles in the first quarter of 2017, down 20.5%-14.5% from the year-ago period, when it shipped 83,036 units.
The lower shipment forecast suggests that dealer inventories are still too high, RBC Capital Markets analyst Joseph Spak wrote in a note. “We believe the mix of that inventory is skewed to MY16 which is an issue if HOG wants to sell the new MY17 lineup.” In October,
Harley said it planned to slow production in the fourth quarter in an effort to work through high inventory levels and reduce its workforce in a move that would cost the company US$20mil-US$25mil.
The company’s shipments have also been hurt as foreign competitors such as Japan’s Honda Motor Co Ltd and Indian motorcycle maker Polaris Industries Inc have cut prices to entice new buyers.
Harley’s rivals also include Kawasaki Heavy Industries Ltd as well as Germany’s Bayerische Motoren Werke AG (BMW).
The company said demand for motorcycles in the United States, its biggest market, was slowing as many Americans choose to spend their disposable income on automobiles, rather than motorcycles.
Harley shipped 262,221 motorcycles in 2016, below its expectation of 264,000-269,000 units.
Shipments fell 11.9% to 42,414 units in the fourth-quarter ended Dec 31. However, Harley’s revenue per motorcycle was up about US$546 at US$16,151.
Retail sales in the United States, where its core baby boomer demographic is aging, were flat in the quarter compared with a year earlier.
The motorcycle maker, which repurchased 1.7 million shares of its common stock for $91 million in the quarter, said its net income rose to US$47.18mil, or 27 cents per share, from US$42.2mil, or 22 cents per share.
At the end of 2016, the company had 19.3 million shares remaining on a board-approved share repurchase authorisation.
Revenue from motorcycles and related products fell 7.4% to US$933mil.
Harley slashed its selling, administrative and engineering expense by 11.8% to US$227.5mil to compensate for lower revenue.
Analysts on average had expected earnings of 31 cents per share and revenue of US$972.5mil, according to Thomson Reuters I/B/E/S.
Up to Monday’s close, Harley’s shares had risen about 44% in the past 12 months, compared with a 16.7% increase in the Dow Jones US Automobiles index. - Reuters
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