"Harley-Davidson Profit Up 27 Percent"
Wednesday July 11 7:18 PM ET
By Patrick Markey
NEW YORK (Reuters) - Harley-Davidson Inc. (NYSE:HDI - news), the legendary U.S. motorcycle maker, on Wednesday said its second-quarter profits cruised past Wall Street expectations as the nation's economic woes failed to dent robust demand for its distinctive bikes.
Milwaukee-based Harley-Davidson, famed for its Sportster, Fat Boy and Road King motorbikes, reported its second-quarter profits rose 27 percent to $115.6 million, or 38 cents per share, compared with $90.6 million, or 29 cents per share, a year earlier.
Wall Street analysts polled by research firm Thomson Financial/First Call expected earnings in the range of 35 to 36 cents per share, with a consensus of 35 cents a share.
``Our consistent performance, as well as our ability to bring new products and services to the market, reinforces our confidence in the company's long-term growth,'' said Harley Chairman and Chief Executive Jeff Bleustein.
Harley said quarterly sales increased 12.7 percent to $850.9 million from $754.9 million a year earlier.
Motorcycle sales for the quarter increased 15.1 percent to $664 million from $576.9 million. Quarterly sales of parts and accessories grew 13.9 percent to $138 million from $121 million, while merchandise sales slipped 8.1 percent to $33.2 million from $36 million a year earlier.
Shipments of motorcycles grew 12.8 percent, or 6,832 units, to 60,161 units.
Industry analysts were encouraged that demand for Harley-Davidson's brand remained solid in a weak economy with the motorcycle maker signaling positive future growth.
``Overall it's a very solid quarter, reemphasizing what we have heard from the dealers, that the economy is not hurting the business of Harley at the retail level,'' said Tim Condor, a leisure analyst with AG Edwards.
Responding to demand, the motorcycle maker said it plans to increase its 2001 production target by 12.9 percent to 231,000 units and has set a production goal of 256,000 units for 2002, an increase of 10.8 percent.
As part of its long-term growth plan, Harley-Davidson said that it plans to invest $145 million in a new 350,000 square-foot manufacturing facility in York, Pennsylvania.
``All of those are positive signals,'' said David Cumberland, an analyst with Robert W. Baird. Cumberland noted that Harley's U.S. registrations exceeded shipments, indicating that the bike maker faces no near-term inventory hurdles.
In its financial services division, Harley said operating income increased to $23.1 million from $11.3 million driven by new consumer financing programs and lower interest rates. The company forecast that its financial services 2001 operating income will be 55 to 60 percent higher than a year earlier.
Harley-Davidson shares have gained nearly 17 percent since the beginning of the year, outperforming the broader S&P500 index, which has slipped about 9 percent year to date.
The stock lost $1.71, 3.6 percent, to close at $46.29 at the end of Wednesday trading on the New York Stock Exchange (news - web sites).
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