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Harley-Davidson announces third quarter earnings decline of 84%
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Harley-Davidson announced decreased revenue for the third quarter of 2009 compared to the same quarter in 2008. At the same time, the Motor Company reported a moderation in the decline of retail new Harley-Davidson motorcycle sales compared to the second quarter of 2009. Worldwide retail sales of new Harley-Davidson motorcycles declined 21.3% in the third quarter compared to last year’s third quarter, an improvement from the 30.1% decline in this year’s second quarter. The decrease in sales for the Motor Company resulted in an 84.1% decline in net income and an 84.5% decline in earnings per share from the same time period in 2008. Shares fell 80 cents, or about 3%, in electronic premarket trading.
In their go-forward strategy, Harley-Davidson unveiled major elements through single-minded focus and resources. With this in mind, the Board of Directors voted to discontinue its Buell product line and divest its MV Agusta unit in an effort to strengthen the Harley-Davidson brand. Employment for a majority of Buell employees, about 80 hourly and 100 salaried positions, will end on December 18, 2009. In addition, the Motor Company will continue to expand its initiatives to enhance profitability through continuous improvement in manufacturing, product development, and business operations.
The Motor Company continues to pursue its previously announced study to determine whether to restructure the manufacturing facility at York, Pennsylvania or to relocate the facility to Shelbyville Kentucky, Shelbyville Indiana, or Murfreesboro Tennessee. The company has begun contract talks with the union representing employees at York and expects to make a final decision on the status of the York plant be the end of the year.
Harley-Davidson Financial Services (HDFS) also recorded operating losses of $31.5 million for the third quarter. HDFS continues to successfully access the credit markets to fund its lending activities but faces recession-related difficulties in getting loans for its customers. Cash and cash equivalents totaled $1.5 billion compared to $500 million a year ago. For the full year, capital expenditures are now expected to be $125 to $145 million, including $15 to $25 million related to the restructuring.
Harley-Davidson continues to expect full-year gross margins to be between 30.5% and 31.5%.
Also see related articles:
Baltimore Motorcycle Travel Examiner: Harley-Davidson discontinues Buell motorcycles
Boomer Biker Examiner: Erik Buell thanks everyone for unforgettable ride
Boomer Biker Examiner: H-D announces 3rd Q results, unveils long-term business strategy
Dallas Motorcycle Examiner: Buell Motorcycles ends production
Charlotte Motorcycle Travel Examiner: Harley Davidson discontinuing Buell motorcycles, founder Erik Buell speaks out
Burlington Motorcycle Examiner: Buell no longer making motorcycles
Detroit Scooter Examiner: Buell motorcycles announces shutdown
DC Motorcycle Travel Examiner: Erik Buell announces Harley-Davidson to end production of Buell motorcycles
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