Harley-Davidson Returns to Profitability

04/20/2010 @ 2:32 pm, by Jensen Beeler19 COMMENTS

Harley-Davidson has announced its Q1 quarterly earnings today, and the Milwaukee-based company posted a $68.7 million profit. This news comes after Harley-Davidson posted a $218 million loss last quarter, and finished in the hole over $55 million for the 2009 year. Harley’s return to profitability is partially due to the company’s restructuring of its financial services, which are once again generating money for the iconic American brand. Harley-Davidson Financial Services posted a profit of $26.7 million this past quarter, almost a third of HD’s net income in Q1.

Harley-Davidson sales are still down 18.2% from Q1 in 2009, the company reports. Though international sales remained fairly steady, declining only 2.8% (US sales were down 24.3%). “We are encouraged by our progress in the first quarter,” said Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc. “

We are seeing directional improvement in our dealers’ retail motorcycle sales as we enter the key selling season. At the same time, given the global economic uncertainty that still exists, we believe conditions will remain challenging throughout this year, and we will continue to factor that into how we manage the business.” Wandell and his crew are reportedly steering Harley-Davidson to find strength in overseas markets, while continuing to serve its core demographic here in the United States.

Revenue from Harley-Davidson motorcycles during the first quarter of 2010 of $808.8 million was down 20.0% compared to Q1 of 2009. Harley shipped 53,674 motorcycles to dealers and distributors worldwide during the quarter, compared to shipments of 74,670 motorcycles in the first quarter of 2009.

It should be noted that Harley-Davidson counts bikes as “sold” when they reach the dealer, not when the dealer actually sells the motorcycle. Harley-Davidson has a history of channel stuffing its dealers, so it’s difficult at this point to tell how many Harley-Davidson motorcycles are actually making it onto the road when looking at these numbers.

Revenue from Parts and Accessories totaled $149.1 million during the quarter, down 12.1%, and revenue from merchandise and apparel, was $66.3 million, down 11.9% compared to the year-ago period.

Harley-Davidson stock was up today with the news, with shares currently trading at $35/share, up 7% from yesterday’s closing.

Source: Harley-Davidson

Comment:

  1. Patrick says:

    The term “stay of execution” comes to mind…

  2. froryde says:

    Oh darn. And I was hoping that HD will just go away…

  3. Skip says:

    Yawn!!! – Who cares? I am more interested in real motorcycle companies that work to improve there product. Harley puts single piston calipers on there disk brakes and call that an improvement. I really doubt too many people really care a hoot about HD.

  4. Willie says:

    Fat cutting, accounting gimmicks, buyout rumors. This will go on for some time. But the days are numbered. Years ago, Stanford proffered the now widely accepted concept of the Product Life Cycle. HD would make a classic case study.

    The inevitable march of time will wind down this story bringing it to a merciful end. In the mean time hope and a river called denial give the faithful something to cling on to even though they know in their hearts . . . its over.

    And the stock. Another classic: a chart formation known as “the dead cat bounce”.

  5. Harley-Davidson Returns to Profitability – http://bit.ly/b4jSsL #motorcycle

  6. Skip says:

    HD still owes Warren Buffet 650 million dollars at 15% interest. This was to cover there financial services division. They were giving bike loans to any pirate that walked in the door. That was the only way HD could keep the sales numbers up and keep the stock holders happy. I’ll bet most of the stock holders do not know about the 125 million loss on Buell that could have been covered by BBP. Harley is buried in bad debt and poor sales. There is no way they can design and build a new modern and up to date motorcycle without a major influx of new cash. The only way that could happen is a total buyout. The company could be bought and then fire the entire management and cut the current line of bikes by 80 or 90%. Put the V-Rod motor in the current cruiser line-up. I know the Harley crowd would hate this because the V-Rod motor does not sound “cool” with straight pipes. But lets face it – the straight pipes and loud exhaust days are numbered with many cities enacting a noise ordinance. My city has a new noise ordinance and the Harley crowd is crying foul. They think it is there right to ride and so off with loud exhaust. Harley can’t expect to sell motorcycles on the sound of the motor. Those days are gone. Harley needs a new V4 motor as the current air cooled twin is so out of date it is ridiculous. A 70 hp motor to power a 900 lb bike? get serious. Harley needs help to survive and stupid marketing with stupid bike names like Fat Bob and CrossBones will not sell an outdated, overweight and underpowered motorcycle.

  7. CarbonBigfoot says:

    Fags.

    this message brought to you by a disgruntled Buell owner.

  8. Doug says:

    I was pretty floored when, during the conference call with investors, CFO John Olin said H-D fully expects more of its dealerships to close their doors during the second quarter. He also said H-D lost six dealerships during the first quarter. Not something you’d really care to hear as an H-D dealer, eh?

  9. Sean Mitchell says:

    I live in one of the towns where the Harley’s per capita is the highest in the nation from what I’ve heard. I worked for a BMW and Ducati Dealership which struggled and lost money every year for 6 years. Even though those are profitable manufacturers, the big Harley Dealerships choked out the competition (part of the reason, anyway).

    Then when Harley started struggling, the HD dealerships bought our dealership in an effort to get some profitable bikes in showrooms. But they cut their own noses off. This is a Harley town and even though Ducati’s and BMW’s sell well everywhere else, they continue to sit in showrooms. Couldn’t have happened to a nicer bunch of guys…

  10. Butch says:

    The Harley dealer here went broke last fall and was taken over by another out of town dealer. It is still the same old crap though. I dropped by to see if there were any changes other than Buell being gone. The salesmen were just a rude as the prior bunch. I asked about a new XR1200 or a new V-Rod and the salesman looked at me like I had 3 eyes. He laughingly said “hay buddy we only sell Harley’s here”. It is now wonder that HD is in trouble. The old line dealer network killed Buell by refusing to sell them or ignoring customers who came in looking to buy one. Buell was a no go for dealers because they could not sell a Buell customer an of the Harley aftermarket crap which is where there profit really is. A Buell rider did not want a Harley do rag, t-shirt, belt buckle or wall clock. I was in a Harley/BMW dealership in Wisconsin. They have a few BMW’s stuck in the back corner. The salesmen are all dressed up like a typical Harley rider.

  11. buellracerx says:

    @Butch

    Unfortunately, you’re exactly right. Some people on the frontline (dealerships) are giving H-D the black eye by trying to appeal to the “badass” walking through the door. Conversely, I know quite a few good, helpful, and friendly dealerships that don’t discriminate; they have the “I don’t care what you ride as long as it’s got 2 (or 3) wheels” mentality.

    Growing up with H-D, it’s truly sad to see them kill their performance roots. It just isn’t a part of the company’s focus (e.g. their ZERO SUPPORT OF THE XR1200 SERIES). I’ll still have fun on my cafe’d sporty (& outrun quite a few squids). lol bring on the trashtalking

  12. XR1200 Buyer? says:

    I stopped at the Harley dealer in Waterloo, Iowa and they have 1 XR1200 on the floor. The salesman said “we don’t sell very many of THOSE” . It was real obvious that he did not care for the XR1200 as he walked away immediately after making that remark. I stood around for another 10 or 15 minutes then I left. I was interested in one but if the dealer is going to treat me like that I will look at another brand. The XR is the only Harley that I would consider buying.

  13. Doug says:

    @XR1200 Buyer?

    I enthusiastically second your comment on the XR1200 being the only H-D to consider buying.

    I’ve gotta find a Victory dealer near Madison, Wis. Those cruisers actually look interesting!

  14. XR1200 Buyer says:

    There is a Victory dealer in Waukon, Iowa which is near Prairie du Chien, Wi. I have looked at the Victory and they are far superior in quality and price than any Harley. More powerful and technically superior motor, better brakes – must I go on. I was looking at a XR1200 because the dealer is close to me. I am also looking at a Victory Hammer 8 Ball.

  15. Real World says:

    Harley just completed construction on a huge new manufacturing building for Buell Motorcycles. This building was built by a group of investors and leased to HD. That lease has to be bought by HD or paid out. That lease, the 650 million loan to HDFS, 125 million loss on the Buell shutdown and plummeting sales of there outdated line of bikes does not spell a good future for Harley. Still Harley refuses to see the light. They continue with there outlaw image advertising and no new products. HD needs a modern motor, lighter framed bikes, better brakes and they really need to attract the younger buyers. Right now there is nothing in the HD lineup to compete for the young buyers. Harley is 100% committed to the aging boomer bike buyer with only 1 bike to sell – the heavy cruiser. Harley Davidson will need a major investor to pump cash into the company so they can design a new modern motor and a new sport touring bike or sport bike if they expect to stay in business. Cruiser style bikes are heavy and not designed for twisty roads. Many cruiser riders find out too late that there bike is best suited for 4 land highways or in-town riding. Harley lack of a good braking system in a major flaw that the Harley faithful will not admit to. Take the Crossbones for example – a single disk front and rear and a single piston caliper in front and a double piston in the rear. This is way inadequate for a 700+lb bike. But with only 63 horsepower maybe that is all it needs if the rider stays in town only. Harley hired a non motorcycle industry person as CEO and the first thing he did was kill Buell. What an idiot as Buell was probably there light into the future. There current line up of out dated and way overpriced bikes certainly will not carry them into the future.

  16. Doug says:

    @Real World

    Buell never was allowed to even begin construction of their new manufacturing facility; H-D scrapped the plans just a few months before eventually discontinuing the brand. Up to that time, Buell occupied leased property in East Troy, Wis., which, yeah, obviously, H-D had to buy out when it pulled the plug.

    http://www.jsonline.com/business/45431597.html

  17. @Skip

    Harley-Davidson owes Berkshire $300 million, not $650 million.

  18. bruce willis says:

    all you guys babbling about how Buell could have saved Harley.
    Where were you clowns and what were you riding all this time.
    If half of you would speak with your wallets and not listen to the crap…. H.D. would still be doing well.
    As it is I still ride a harley and always will. I also own a Hayabusa and ZRx 1200 but I know if I had to sell them they are virtually worthless after a few years whereas my Harley is still worth 85% of what I paid for it 3 years ago.
    Harleys tell a story that you obviously can not hear.
    Harley said it best in their 2011 brochures.
    The trip on any other bike would just not be the same.
    When was the last time you were out riding and a group of people formed around you and your bike to chat…not on any jap scrap that is for sure.All H.D.’s money stays on these shores and pays hard workin Americans …not some foreign crap that must become a classic in 5 years or less or risk rusting in place and becoming even more worthlesds.
    HD rules…admit it!!!!!

  19. bruce willis says:

    P.S.
    I live in Canada and still think without Harley there would be no industry….after all who is copying Hd all these years.