NEW YORK, N.Y. – Harley-Davidson Inc. said Wednesday that its first-quarter profit jumped 44 per cent, as improving economic conditions boosted U.S. sales of its famous motorcycles.
The results beat Wall Street expectations and the company boosted its forecast for shipments for the year.
Harley shares climbed $2.40, or 4.8 per cent, to $52.76 in late morning trading, after peaking at $53.03 earlier in the day. That easily topped the Milwaukee-based company’s previous 52-week high of $52.03 and marked its highest share price since September 2007.
Keith Wandell, Harley’s chairman, president and chief executive, attributed the results to an improved U.S. economic environment and the company’s ongoing restructuring program, along with the enduring appeal of the company’s products.
“In the U.S., while we are proud of our market share gains in recent years, we believe there is a lot of room yet to run on the industry’s road to recovery,” Wandell said in a conference call with analysts.
He added that last year’s industry wide bike sales totalled only about half of their prerecession peak and that the industry is still working its way through a glut of used bikes.
Meanwhile, Harley continues to expand its overseas presence, despite continued economic uncertainty in markets like Europe, estimating that it has so far only realized about half of its potential international sales, Wandell said.
Tough economic times tend to hurt sales at companies like Milwaukee-based Harley, whose bikes can range from about $8,000 for a basic model to more than $30,000 for a large highly customized model.
After the global economy stalled in 2008 and Harley’s sales plunged 23 per cent the next year, it embarked on a massive plan to slash its costs and transform the way it manufactures its motorcycles.
But in the years since, the company has managed to turn itself around, despite economic woes both at home and abroad. Harley’s sales of motorcycle and related products grew 13 per cent in 2011 and the recent quarter marked its fourth-straight increase in U.S. sales.
Harley’s share price has posted hefty gains as well, rising to more than six times what it was in March 2009. And since the beginning of this year, the shares have risen about 30 per cent.
For the three months ended April 1, Harley reported net income of $172 million, or 74 cents per share, up from $119.3 million, or 51 cents per share, a year ago.
Analysts polled by FactSet expected a profit of 72 cents per share.
Sales of motorcycles and related products jumped 20 per cent to $1.27 billion from $1.06 billion in the same quarter last year, ahead of average analyst predictions of $1.22 billion.
Worldwide motorcycle sales rose 20 per cent to 59,677 bikes and included a 26 per cent jump in U.S. sales. International sales rose 11 per cent.
Demand for heavy-weight motorcycles, which include many of the company’s priciest models, increased 18 per cent. Sales of parts and accessories rose 21 per cent to $199.1 million, while general merchandise sales, such as clothing, rose 19 per cent to $74.6 million.
Based on the first-quarter results, Harley boosted its full year shipment guidance to a range of 245,000 to 250,000 bikes, up from 240,000 to 245,000 bikes. For the second quarter, which represents the height of the Harley’s selling season, the company said it expects to ship between 79,000 and 84,000 bikes.
Harley said its restructuring costs for the quarter totalled $11.5 million and that it still expects its overall restructuring program, which began in 2009, to result in total one-time costs of between $500 million and $520 million, including between $500 million and $520 million this year.