A significant increase in production helped Harley-Davidson Inc. (H-D) post second-quarter gains, but reduced U.S. retail sales have the company closely eyeing future shipments.
H-D reported a retail sales decrease of 5.5 percent for the U.S. market and an 1.2 percent drop for its worldwide retail sales in its second quarter, which ended July 1. First-half U.S. sales declined by 5.6 percent and, according to data provided by H-D, are down more than the rest of the U.S. heavyweight market, which through June dropped 4 percent compared to the year-ago period.
“U.S. retail sales of Harley-Davidson motorcycles in the first half of the year have not met our expectations,” H-D CEO Jim Ziemer said in a press release. “As a result, we will continue to closely monitor the retail environment and regularly assess our planned wholesale shipments throughout the remainder of 2007.”
While U.S. sales were down, international sales grew by nearly 14 percent in the second quarter. International sales have continued to become more important to the manufacturer’s bottom line as it represented 25 percent of H-D’s overall first-half retail sales this year compared to 18 percent in 2004.
International second-quarter sale increases were reported in Europe (13.7 percent increase), Canada (9.9 percent) and Japan (5.2 percent).
Other sales increases reported by H-D for its second quarter compared to the year-ago period include:
Shipments rose to 95,117 units in the second quarter, 22 percent more than the prior year quarter. But for the first half, H-D’s overall shipments are only 2 percent more than the prior year and actually approximately 1 percent less for U.S. dealers.
In a recent AG Edwards & Sons survey of 50 dealers from across the United States, 76 percent of dealers said they either do not have enough inventory or are just right. In 2006, that number was 95 percent. Dealers that were heavy in inventory were mostly located in the upper Midwest or in the East.
Touring bikes continue to make up more of H-D’s shipments.
A comparison of first-half production numbers shows touring bikes make up about 35 percent of H-D’s total production this year compared to 30 percent in 2004.
Looking ahead, the company said it expects to ship 91,000-95,000 motorcycles in the third quarter. It also expects moderate revenue growth and a lower operating margin for the rest of 2007. Revenue growth for the second quarter was 17.7 percent while the manufacturer’s net income of $290.5 million was an increase of 19.3 percent.
H-D’s financial services segment reported an increased operating income of $65.2 million, a rise of $9 million compared to last year. PSB Click here for reuse options!
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