Harley-Davidson Profit Rises on U.S. Sales, Cuts

Harley-Davidson Inc. (HOG), the biggest U.S. motorcycle maker, had its largest gain since Nov. 30 after reporting a profit in the fourth-quarter by boosting sales in the U.S. and lowering costs.

Income from continuing operations totaled $54.6 million, or 24 cents a share, compared with a loss of $42.1 million, or 18 cents, a year earlier, Harley said today in a statement. The average estimate of 10 analysts surveyed by Bloomberg was for a profit of 22 cents a share. The shares rose 3.5 percent to $43.32 at the close in New York.

Harley, the maker of the Fat Boy and V-Rod motorcycles, has cut expenses by renegotiating labor contracts at factories in Pennsylvania and Wisconsin. The Milwaukee-based company has also introduced bikes, such as the $7,999 SuperLow, to attract women and other new riders. Retail sales rose 12 percent in the U.S. and 11 percent worldwide, the company said.

“This was pretty much what we had intended to do, the new products we’re bringing to market and how we’re focusing our market initiatives and trying to reach new customers,” Chief Executive Officer Keith Wandell said in an interview.

Sales, excluding financial services revenue, increased 12 percent to $1.03 billion. A year ago, revenue totaled $917.1 million. The company raised prices on its bikes last July for the first time in four years. The increase was 1 percent in the U.S. and 0.75 percent in Europe, Chief Financial Officer John Olin said in an interview.

Motorcycle Shipments

Harley-Davidson’s $43.32 closing price is the highest since July 29 and the shares have gained 11 percent this year after rising 12 percent in 2011.

Harley shipped 50,730 of its namesake motorcycles in the quarter, a 14 percent increase from 2010. For the year, it shipped 233,117 bikes, an 11 percent gain. The company said in October it expected to ship 228,000 to 235,000 motorcycles in 2011, including as many as 52,500 in the fourth quarter.

Motorcycle sales in Latin America, Harley’s smallest region, rose 42 percent during the quarter to 2,492 after the motorcycle company revamped its dealer network in Brazil, closing nine stores and opening 11.

“The service is better as is the focus on the customer,” Wandell said. “They’re doing things the way we really expect things to be done and it’s just having a huge impact.”

This year, Harley-Davidson said it will ship 240,000 to 245,000 motorcycles and 58,000 to 63,000 this quarter.

Fourth-quarter gross margin widened to 31.2 percent from 29.6 percent a year ago. The fourth quarter typically is Harley’s smallest by sales and profit. For 2012, the company said gross margin will widen to between 34.75 percent and 35.75 percent, from 33.4 percent last year.

To contact the reporter on this story: Mark Clothier in Southfield, Michigan, at mclothier@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net.

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