Harley-Davidson profit report tops estimates despite production woes

Harley-Davidson shares rose the most in 5 months following 2nd-quarter gain and income beat estimates, a indicator that Chief Executive Officer Jochen Zeitz’s turnaround approach is supporting the bike maker triumph over supply-chain headaches and a short term creation shutdown.

The Milwaukee-based mostly company posted earnings of $1.46 a share, nicely more than the $1.02 normal of analysts’ estimates compiled by Bloomberg. Income from bikes and similar merchandise rose to $1.27 billion, in comparison with the $1.25 billion forecast by analysts. Harley shares rose 6.7% at 10:10 a.m. in New York and earlier received 10%, the most on an intraday foundation because early February.

Zeitz, a previous Puma SE government who took the helm of the troubled manufacturer in February 2020, has slashed costs, exited unprofitable marketplaces and tightened stock to increase bike selling prices as aspect of his “Hardwire” turnaround plan. Although he’s successfully launched new types and mopped up excess bicycle inventory, transport bottlenecks and pieces shortages have constrained revenue progress coming out of the pandemic.

The gain beat arrived even as worldwide revenue of bikes fell to 50,500, down 23% from the yr-before quarter. Revenue by that evaluate were being down 28%, to 34,900, in North America, Harley’s largest marketplace. Europe fell 15%, Latin America dropped 8%, and sales in Asia rose about 1%.

“Demand was potent throughout the board, but the offered bikes in the dealership have been the concern,” Zeitz explained on a contact with analysts. Harley struggled to ship what it experienced to dealers, he mentioned.

Harley was compelled to halt manufacturing and shipments for two weeks in May well and June due to the fact of a “regulatory compliance matter” with a portion from a single of its suppliers. At the time, Harley explained to traders it would be able to make up for shed manufacturing in the next 50 percent of 2022.

Zeitz also is culling dealerships in the U.S. and clawed back a portion of vendor income on specific types earlier this yr, a go that could aid shore up income margins, according to UBS AG.

Harley taken care of its forecast of 5% to 10% profits development in 2022, and running revenue margin of 11% to 12%.

Connected video clip: