Harley Sales Miss as Strong Dollar Pinches Global Sales PushBy
Currency makes rivals’ bikes cheaper, pressures Harley exports
Financial-services profit also squeezed in first quarter
Harley-Davidson Inc. reported slowing motorcycle sales in almost every region, underscoring the company’s challenges with a strong U.S. dollar.
Motorcycle revenue fell 16 percent to $1.33 billion in the first quarter, shy of the $1.35 billion average estimated by analysts. Bike sales fell both in the U.S. and overseas with the exception of Latin America, the company’s smallest market.
The strong dollar is hurting Harley’s efforts to expand overseas by making competitors’ foreign-made motorcycles cheaper in the U.S. and reducing the profits Harley earns on bikes shipped abroad. President Donald Trump said last week the dollar had gotten too strong, which he attributed to confidence in his policies. Chief Financial Officer John Olin said Tuesday the dollar could reduce Harley’s profits by as much as $10 million this year.
Harley-Davidson shares fell 4.5 percent to $56.73 as of 9:30 a.m. in New York trading. The shares gained 28 percent over the past year through Monday’s close.
First-quarter profit per share fell to $1.05, beating analysts’ average estimate for $1.02, and the company reiterated its full-year forecasts for operating and gross margins to be in line with last year’s results. Financial-services profit fell 6.6 percent to $52.6 million. Full-year motorcycle shipments will be flat to down modestly, the company said.
Harley’s projected deliveries of 80,000 to 85,000 motorcycles in the second quarter imply that second-half sales will need to increase by 20 percent for full-year sales to be flat, Joseph Spak, an analyst with RBC Capital Markets, said in an email to clients.
“We believe the market will doubt that level of shipments is the correct strategy amid still soft retail,” he said.
In the first quarter, Harley reduced shipments of new models so dealers could focus on selling leftover 2016 inventory. The average price per bike fell $342 in the first quarter from a year earlier.