Harley-Davidson plunges after missing estimates

Harley-Davidson Inc. capped its fifth straight year of lower U.S. sales with quarterly profit and revenue that missed estimates, sending shares plunging as much as 8.7% in premarket trading.

Adjusted earnings rose to 20 cents a share in the quarter, the Milwaukee-based manufacturer said in a statement Tuesday, missing analysts’ average estimate for 25 cents. Motorcycle revenue and shipments fell more than expected, dragging Harley’s stock to the lowest levels since September in early Tuesday trading.

Harley’s Chief Executive Officer Matt Levatich is trying to attract new and younger riders to stanch the bleeding in the U.S., its biggest source of sales, while also making cheaper, lighter bikes to tap into demand in emerging markets. Investment in new products like electric motorcycles and middle-weight models is pressuring margins as sales continue to slide.

U.S. retail sales have declined in 20 of the last 21 quarters, including each of the last 12. International sales rose 0.5% in the quarter but were down 3% for the year. Asia Pacific was the only region in the world where Harley increased sales in 2019. The company is targeting 50% of revenue to come from outside the U.S. by 2027.

Harley doesn’t expect to see significant revenue growth or margin expansion until 2021. It’s launching middleweight models and children’s e-bikes late this year. LiveWire, the company’s first all-electric motorcycle, began shipping to dealers in September.

Earlier this month, Harley said it’s planning to give long-term shareholders the power to directly nominate board members, a move that could give investors more influence.

The iconic motorcycle maker has also had to contend with added costs from U.S. President Donald Trump’s trade war. The company built a new factory in Thailand in 2019 that allows it to sidestep tariffs imposed by the European Union in response to U.S. steel tariffs.

– Gabrielle Coppola (Bloomberg)

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