Harley-Davidson Financial News
Although Harley-Davidson motorcycle sales were down 5.5 percent worldwide, 8.4 percent in the United States, at the close of the second quarter of 2010, revenue figures are positive compared to a year ago. Harley President and CEO Keith Wandell says these figures show that things are flowing in a positive direction.
Keith Wandell says:”Despite the decline in second-quarter retail motorcycle sales, we believe interest in the Harley-Davidson brand remains strong among riders of all generations. We will continue to focus our resources on expanding the global reach of the brand and developing new products that will reach even more riders going forward.”
The Motor Company reported a second-quarter revenue in 2010 of $831.6 million, which is up 2,8 percent compared to the same period last year. Also, Harley shipped 59,046 motorcycles to dealers and distributors worldwide during the 2010-second quarter, compared to 58,179 motorcycles in the second quarter of 2009.
Harley reported in foreign markets, where the Milwaukee-based manufacture reported it wants to keep expanding, retail sales were down only 0.2 percent compared to last year’s second quarter. Harley reported that figure is against an industry-wide decline in U.S. heavyweight (651cc-plus) motorcycle retail unit sales, which were 10.1 percent in the second quarter compared to the same quarter last year.
According to a Harley-Davidson Press Release:
Wandell thanked employees “for their continued hard work and support of our strategy,” which includes draconian cuts to the union work force at the company’s plant in York, Pa., and pressure to match them at two plants in Wisconsin. Negotiations with the Wisconsin unions are set to begin this week.
The company has threatened to abandon its production plants in Tomahawk and Milwaukee if it can’t win concessions, but says it will retain corporate headquarters, product development and the Harley-Davidson Museum in Milwaukee, regardless of the outcome of its decision on production operations.
H-D reported second-quarter 2010 income from continuing operations of $139.3 million, or 59 cents per share, compared to income of $33.4 million and earnings per share of 14 cents from continuing operations in the year-ago quarter.
Second-quarter 2010 results include operating income from financial services of $60.8 million. Revenue from motorcycles and related products was $1.14 billion in the second quarter.
For the first six months of 2010, Harley-Davidson income from continuing operations was $208 million, or 89 cents per share, a 28.9 percent increase from the year-ago period.
Revenue from Harley-Davidson motorcycles of $831.6 million for the second quarter of 2010 was up 2.8 percent from to the year-ago period. The company shipped 59,046 Harley-Davidson motorcycles to dealers and distributors worldwide during the quarter, compared to shipments of 58,179 motorcycles in the second quarter of 2009.
Keith Wandell says: “Harley-Davidson is making steady progress at executing its strategy to deliver results through focus. We are seeing the benefits of our restructuring and continuous improvement activities reflected in our earnings performance. We are pleased with the continued moderation in the rate of decline of retail new Harley-Davidson motorcycle sales again in the second quarter.”
“At the same time, we continue to believe conditions will remain challenging this year for new motorcycle purchases and we will manage the business based on that expectation, with a continued strong focus on managing supply in line with demand.”
Revenue from parts and accessories was $231.8 million during the quarter, up 0.2 percent, and revenue from general merchandise, which includes MotorClothes, was $67.4 million, down 3.2 percent compared to the year-ago period.
Gross margin was 35 percent in the second quarter, compared to 34.1 percent in the year-ago period. Second-quarter operating margin decreased to 13.9 percent from 15.3 percent in the second quarter of 2009.
For the first half of the year, shipments of Harley-Davidson motorcycles were 112,720 units, a 15.2 percent decrease compared to last year’s 132,849 units for the period. Revenue from Harley-Davidson motorcycles through six months was $1.64 billion, a 9.8 percent decrease compared to the year-ago period.
Six-month PG&A revenue was $380.9 million, a 5 percent decrease from the first half of 2009. General Merchandise revenue was $133.6 million, a 7.7 percent decrease compared to the same period in 2009. Gross margin through six months was 35.7 percent and operating margin was 13.1 percent, compared to 35.7 percent and 16.8 percent respectively in last year’s first half.
The company reiterated its plans to ship 201,000 to 212,000 Harley-Davidson motorcycles to dealers and distributors worldwide in 2010, a reduction of 5 to 10 percent from 2009. In the third quarter of 2010, the company expects to ship 53,000 to 58,000 Harley-Davidson motorcycles.
Second-quarter operating income from HDFS was $60.8 million, compared to an operating loss of $90.5 million in the year-ago quarter. Last year’s second-quarter results were affected by two non-recurring, non-cash charges totaling $101.1 million to establish a credit loss provision related to the reclassification of motorcycle loan receivables and to write off all HDFS goodwill.
Through six months, operating income from Financial Services was $87.5 million, compared to an operating loss of $79.3 million in the first half of 2009.
The company expects its ongoing restructuring activities to result in total one-time charges of $430 million to $460 million into 2012, including charges of $175 million to $195 million in 2010.
This year the company expects a partial offset from savings of $135 million to $155 million from restructuring activities, increasing to expected annual ongoing savings of approximately $240 million to $260 million upon completion of the restructuring.