Harley Davidson Profit Falls on Sluggish US Sales
Harley-Davidson, the U.S. motorcycle maker, said Friday its quarterly earnings fell more than 15 percent, blaming "sluggish" sales in the United States, it biggest market.
In a conference call following the results, Chief Executive Jim Ziemer said the current business climate was "tough" as falling housing prices have made consumers reluctant to buy big-ticket toys such as motorcycles, boats and motor homes.
The company, whose shares fell as much as 2.7 percent, said its third-quarter net profit fell 15.3 percent to $265.0 million, or $1.07 a share, from $312.7 million, or $1.20 a share, last year.
Sales fell 5.8 percent to $1.54 billion.
Analysts, on average, expected the Milwaukee-based company to report a profit of $1.04 a share on sales of $1.52 billion.
In September, Harley warned Wall Street that its third-quarter and full-year results would disappoint, slashed its outlook for next year and withdrew its 2009 forecast.
In a note to investors, Craig Kennison, an analyst at Robert W. Baird, called the decline in retail sales "smaller-than-expected" and said Harley's aggressive share buybacks "trended favorably" for earnings. The company spent $500 million on such purchases during the quarter alone.
While Harley's sales in the United States fell 2.5 percent during the quarter, the overall U.S. heavyweight motorcycle market contracted 4.4 percent -- meaning Harley gained share.
While sales in Canada fell 7.7 percent during the quarter, other international sales were strong, growing 10.7 percent in Europe and 9.1 percent in Japan.
And the decline in revenue from motorcycle sales was partially offset by an increase in revenue from sales of parts and accessories as well as apparel and collectibles.
"There's actually lots of encouraging news in here," said Peter Jankovskis, chief investment officer with OakBrook Investments in Lisle, Illinois, which owns Harley shares.
"The apparel and collectibles sales show that people still love the brand."
In early trading on the New York Stock Exchange, Harley shares were down 60 cents to $48.32.