Harley-Davidson 1Q Profit Down 18 Pct

Sagging U.S. sales and a three-week strike at Harley-Davidson Inc.'s largest production plant caused the motorcycle maker's profit to drop 18 percent in the first quarter.

The iconic motorcycle maker announced Thursday net income for the quarter ended April 1 totaled $192.3 million, or 74 cents per share, compared with a profit of $234.6 million, or 86 cents per share, a year ago. Revenue dropped 8.3 percent to $1.18 billion from $1.29 billion last year.

"Everybody knew about the strike. That was not surprising to anybody," said Jim Ziemer, Harley's chief executive officer.

Despite the decline, earnings still beat Wall Street projections. Analysts had expected a profit of 72 cents per share on revenue of nearly $1.1 billion, according to a poll by Thomson Financial.

Harley shares rose $2.30, or about 3.8 percent, to $63.56 in afternoon trading Thursday on the New York Stock Exchange.

Shipments were down 14.8 percent to 67,761 units in the quarter, above Harley's previously reduced shipment guidance of between 64,000 and 66,000 bikes. Harley had said the strike would mean the loss of about 14,000 bikes for the year.

But Ziemer said employees rallied and made an extra 1,800 bikes, the equivalent of one production day. That gave the company a little boost, though it still came short of the 82,000-84,000 bikes it had expected to make before the strike at the plant in York, Pa. in February.

Worldwide retail sales of Harley-Davidson motorcycles dropped 1.3 percent in the quarter.

Domestically, sales were down 5.9 percent _ below the overall heavyweight motorcycle market's decline of 0.7 percent for the quarter, the Milwaukee-based company said. The first quarter typically accounts for about 17 percent of annual sales and does not indicate how the year will fare, Ziemer said.

Overseas, Harley's sales were up 16.5 percent _ marking the 10th quarter of double-digit growth. Europe saw the strongest sales growth internationally, with sales up 25.7 percent. Sales in Canada were up 14 percent while sales in Japan dropped 7.7 percent, though that was a loss of only 190 bikes, Ziemer said.

The U.S. market is more than twice the size of the overseas market, so Harley expects its international sales to continue outpacing domestic ones.

"We've been putting a lot of investment in our dealer network and products in international markets and we're now reaping some of those benefits," he said.

source:www.washingtonpost.com