In this news, we discuss the Harley shines as CEO Zeitz’s turnaround plan boosts profit.
(Reuters) – Harley-Davidson Inc HOG.N beat earnings expectations on Tuesday, as tight inventories helped push prices up and contained costs as part of CEO Jochen Zeitz’s restructuring plan, making climb its shares to 28%.
Overall shipments fell just 6% in the third quarter, following a 59% drop in the previous quarter, indicating increased demand for the maker of large cruisers.
The strong recovery from the lows of the pandemic comes as CEO Zeitz seeks to recharge the business by refocusing its attention on big bikes and traditional markets like the United States and Europe.
Harley also tightened supplies and cut production, pushing up prices for used motorcycles, which was once a drag on new motorcycle sales.
“We manage inventory online or rather below demand,” Zeitz said. “Dealers sell new bikes at or very close to MSRP (Manufacturer’s Suggested Retail Price) and the dealership’s profitability is higher.”
Global dealer inventory fell 30% in the quarter, and Zeitz said the company plans to exit 40 unprofitable markets.
The company left the world’s largest two-wheeler market, India, last month and recently announced a plan to develop and sell a range of premium motorcycles under its brand in the country with Hero MotoCorp. HROM.NS.
Retail sales in its largest market, the United States, where Harley has not seen a sales increase in the past six years, fell 10% from the previous year but were much lower down 27% in the second quarter.
Total expenses decreased 26% to $ 196.9 million in the quarter.
Net income rose 38% to $ 120 million, or 78 cents per share in the third quarter ended September 30. Analysts had expected earnings of 21 cents a share, according to data from Refinitiv.
Revenue from motorcycles and related products fell to $ 964 million, from $ 1.07 billion a year earlier.
Report by Rachit Vats in Bengaluru; Editing by Sweta Singh and Arun Koyyur
Original © Thomson Reuters