April 24, 2006 – Finance Digest

Harley-Davidson 1Q net income up 3.2%
Harley-Davidson, Inc. (NYSE: HDI) net income for its first quarter ended March 26 was $234.6 million, up 3.2 percent from net income of $227.2 million during the first quarter of 2005.
First quarter diluted earnings per share (EPS) were $0.86, an 11.7 percent increase compared with last year’s $0.77.
The company’s first quarter revenue was $1.29 billion, a 4 percent increase compared to revenue of $1.24 billion in the year-ago quarter.
Revenue from Harley-Davidson motorcycles was $1.01 billion, an increase of $29.6 million, or 3 percent compared to the first quarter last year. Shipments of Harley-Davidson motorcycles totaled 79,506 units, an increase of 2,790 units, or 3.6 percent over last year’s first quarter.
Worldwide retail sales of Harley-Davidson motorcycles increased 6.9 percent for the first quarter compared to the same period in 2005. In the United States, retail sales of Harley-Davidson motorcycles increased 5.8 percent for the quarter. The heavyweight motorcycle market in the U.S. increased 6.8 percent for the same period.
In international markets, retail sales of Harley-Davidson motorcycles grew 11.6 percent. First-quarter retail sales were up 16.3 percent in Japan and 6.6 percent in Europe.
Revenue from parts and accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $182.9 million, an increase of $6.0 million, or 3.4 percent over the year-ago quarter. Revenue from general merchandise, which consists of MotorClothes apparel and collectibles, totaled $68.6 million, an increase of $9.1 million, or 15.3 percent.
Gross margin for the first quarter of 2006 was 38.4 percent of revenue, up from 37.6 percent for the same period in 2005. Operating margin increased from 24.2 percent in the first quarter of 2005 to 24.3 percent in the first quarter of 2006.
“Harley-Davidson is off to an excellent start for 2006, having achieved record revenue and earnings,” said Jim Ziemer, president and chief executive officer, Harley-Davidson, Inc. “In addition, our dealers continued their retail sales growth momentum from the second half of 2005 as motorcycle sales increased by approximately 7 percent worldwide in the first quarter.”
Harley-Davidson’s second quarter shipment plan is 78,000 2006 model year motorcycles. Production in the second quarter is scheduled to include approximately 13,000 2007 models to prepare for the new model introduction in mid July; however, these 2007 motorcycles will not be shipped until the third quarter.
The company’s wholesale shipment target for the calendar year 2006 remains between 348,000 and 352,000 Harley-Davidson motorcycles.

Polaris 1Q net income, profit falls
Polaris Industries Inc. (NYSE:PII) (PSE:PII) says net income for its first quarter ended March 31 was $11.5 million, or $0.27 per diluted share, down from net income of $17.6 million, or $0.39 per diluted share in the first quarter of 2005.
Sales during the 2006 first quarter were $333.5 million, down 7 percent from last year's first quarter sales of $358.3 million.
Snowmobile sales for the period totaled $2.5 million, plummeting from $7.2 million during last year’s first quarter. Polaris said shipments were lower as a result of weaker retail sales during this past riding season due to below normal levels of snowfall across many regions of North America. The company also said warranty issues relating to certain new products resulted in higher than anticipated season-ending dealer inventories.
ATV sales decreased 8 percent. Polaris said dealer inventories of ATVs in North American remain higher than desired, but said factory inventories of ATVs were lower at the end of the 2006 first quarter when compared to the same period in 2005. The company said first quarter shipments of ATVs to dealers in North America decreased in response to dealer inventory levels.
Sales of Victory motorcycles increased 8 percent. Polaris attributes the increase to improved brand recognition, the success of the Hammer and Vegas Jackpot models, the addition of a more powerful 100 cubic inch engine and six-speed transmission to most of the model line, and improvements in the dealer network. The company continues to expect full year 2006 Victory motorcycle sales to be 15 to 20 percent higher than the full year 2005.

BRP, Synerject Complete Deal
Synerject LLC, a 50:50 joint venture between Orbital Corp. Ltd. and Siemens VDO Automotive Corporation, has completed its acquisition of the manufacturing assets of BRP US Inc.’s Delavan, Wis. engine management modules facility.
Synerject, Newport News, Va., was formed in 1997. The company supplies engine management systems, modules and components for the marine, recreational, motorcycle and industrial markets. The scope of its product offerings range from vehicle fuel delivery systems to complete engine management modules.
The Delavan facility was established in 1996 and acquired by BRP in 2001. With operations spanning approximately 40,000 sq. ft. of factory space and 80 employees, the facility manufactures fuel injectors and electronic engine management modules and components for BRP’s Johnson and Evinrude divisions. Supply contracts with BRP for the products made in Delavan are an integral part to the purchase agreement.
The newly acquired business is expected to increase Synerject’s annual revenue by more than 50 percent from the $42 million reported at fiscal year end June 30, 2005.

Sea-Doo partners with Close Motor
Jets Marivent, Sea-Doo’s official personal watercraft distributor in the United Kingdom and Ireland, has entered into a partnership with Close Motor Finance Ltd.
Sewell’s recently voted CMF, Sea-Doo’s approved finance provider for this year, the top financier in the United Kingdom. This is CMF’s first partnership for its new leisure division.

Suzuki Grows Operation in Taiwan
Japan’s Suzuki Motor Corp. recently decided to move its R&D and production of sub-150cc powered two-wheeler products to Taiwan, reported CENS news service. The move would make the island an important manufacturing base for Suzuki products exported to Japan, Europe and the United States.
To accommodate its more important role in Suzuki’s global operations, the Tailing Motor Co., Suzuki’s local partner, has poured hundreds of millions of New Taiwan dollars into capacity expansion and equipment renewal. This project will boost the Taiwanese company’s annual PTW production capacity from 100,000 units now to 150,000 units by the end of the year.
Suzuki plans to procure a total of about 80,000 PTWs from Taiwan this year, including 30,000 units to be shipped to Japan, reported CENS. Tailing’s cooperation with Suzuki is not new. A Tailing official told CENS his company once used the Japanese firm’s sales channels to export Taiwan-made scooters to Europe and the United States, and that it recently won orders from Suzuki technical partners in Vietnam, Malaysia, the United States and South Korea for scooters over 100cc.

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