Harley-Davidson Inc. (HOG), the biggest U.S. motorcycle maker, fell the most in 3 1/2 years after second-quarter revenue trailed analysts’ estimates and the company said currency exchange rates will hurt profit margins.
The shares slid 4.5 percent to $41.27 at 12:09 p.m. in New York after tumbling 12 percent for the steepest intraday drop since January 2009. The Milwaukee-based company’s stock had gained 11 percent this year through yesterday.
Harley reported quarterly sales excluding financial services of $1.57 billion, compared with the $1.63 billion average of 10 estimates compiled by Bloomberg. Chief Financial Officer John Olin said on a conference call today that currency rates reduced revenue per bike in the quarter and are expected to contribute to lower gross margins in the second half.
“In the first quarter, particularly in North America, we saw a release of some pent-up demand along with the warm winter and spring, which pulled some sales forward,” Keith Wandell, Harley’s chief executive officer, said in an interview. “Now, we’re sort of swinging back into being more conservative and trying to figure what’s going to happen with the global economy and the election and where our economy is headed.”
Harley sold 55,761 motorcycles in the U.S. during the second quarter, a 4 percent increase from a year earlier, as global sales rose 2.8 percent to 85,714, according to its earnings statement. The company’s U.S. sales had surged 26 percent in the first quarter.
Net income for the maker of Super Glide and Night Rod motorcycles rose 30 percent to $247.3 million, or $1.07 a share, compared with $190.6 million, or 81 cents, a year earlier, Harley said. The average estimate of 12 analysts surveyed by Bloomberg was $1.05 a share.
Revenue excluding financial services rose 17 percent from the second quarter of 2011, as total sales increased 15 percent to $1.73 billion. The company gets about a third of its revenue from motorcycles and related products outside the U.S.
Harley benefited from reduced costs through renegotiating labor contracts at factories in Pennsylvania and Wisconsin. Bikes such as the $7,999 Super Low, less pricey and easier to handle, are winning new riders. The company hired Wandell in 2009 from the No. 2 position at Johnson Controls Inc. to revive operations.
Second-quarter gross margin widened to 35.9 percent of sales from 35 percent. Operating margin from motorcycles and related products climbed to 19.7 percent from 16.4 percent.
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