May 12, 2008 – Harley’s Q1 revenue up 11 percent

Harley-Davidson Inc. reported a decrease in worldwide new unit sales but an increase in first-quarter revenue thanks to a favorable bike mix and foreign currency exchange rates.
Harley-Davidson’s sales of $1.3 billion for its first quarter, which ended March 30, represented a nearly 11 percent increase over the prior-year period. However, the company’s net income of $187.6 million was a 2.5 percent drop from last year.
The Milwaukee, Wis.-manufacturer reduced its production plan for this year after its first-quarter new unit sales dipped nearly 13 percent in the United States and 5.6 percent overall. A large part of that production reduction figures to occur in the second quarter. The estimated second-quarter build of 76,000-80,000 new bikes could be as much as 25 percent less than last year.
Jim Ziemer, Harley-Davidson CEO, noted in a press release the company remains “committed to shipping fewer Harley-Davidsons motorcycles to our worldwide dealer network than we expect they will sell this year.”
In a conference call with stock analysts, Tom Bergmann, Harley’s chief financial officer, notes U.S. dealers’ inventories were lower at the end of the first quarter than they were last year. “We believe we are taking the right steps to carefully manage the supply of motorcycles to our dealers,” he said.
“As we begin to implement the shipment reduction during the second quarter, we realize this might result in some inconvenience to our dealers and customers, and we are working to minimize any disruptions,” Bergmann said, noting the company’s new dealer allocation system “will provide more flexibility and enable us to do a better job of having the right motorcycles in the right market at the right time.”
Although new unit sales are down, Harley-Davidson reported an increase in revenue gained from each new bike sale. The average revenue per new unit for Harley rose to $997, or 7.6 percent greater than last year after the first quarter, Bergmann says.
He also notes Harley’s new models in its custom segment, the Cross Bones and the Rocker C, have been hot sellers. The company also sees continued value in its Sportster family, noting the brand loyalty of those riders who often are new to the brand. Bergmann said of those Sportster buyers who plan on buying another bike, more than 90 percent “aspire to buy another Harley.”
Like in recent quarters, Harley-Davidson continues to increase unit sales and revenue in its international markets. New unit sales rose nearly 17 percent over the prior-year period overseas. In Europe, Harley sales were up nearly 8 percent while percentage gains were higher in its Asia Pacific (19.5 percent) and Latin America (53.3) regions.
Not surprisingly, Harley-Davidson is building more bikes for those overseas areas. Bergmann says international shipments represented approximately a third of overall shipments, up nearly 6 percentage points from a year ago. psb

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