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Harley-Davidson profit report tops estimates despite production difficulties

Harley-Davidson shares rose by the most in five months after second-quarter profit and revenue beat estimates, a sign that CEO Jochen Zeitz’s turnaround plan is helping. motorcycle manufacturers overcome supply chain headaches and temporary production shutdowns.

The Milwaukee-based company posted earnings of $1.46 per share, well above the $1.02 average in analyst estimates compiled by Bloomberg. Sales from motorcycles and related products rose to $1.27 billion, compared with analysts’ forecasts of $1.25 billion. Harley shares were up 6.7% at 10:10 p.m. in New York and had previously rallied 10%, their highest intraday level since early February.

Zeitz, a former Puma SE executive who took the helm of the troubled manufacturer in February 2020, has cut costs, exited unprofitable markets and tightened inventory. to raise the price of motorbikes as part of its “Hardwire” turnaround plan. While he’s successfully introduced new models and cleared excess bike inventory, shipping bottlenecks and parts shortages have limited sales growth due to the pandemic.

Profits beat even as global motorcycle sales fell to 50,500 units, down 23% from the previous quarter. Sales by that measure fell 28% to 34,900, in North America, Harley’s biggest market. Europe is down 15%, Latin America is down 8%, and sales in Asia are up about 1%.

“The demand is huge across the board, but the bikes are available in authorized dealer is a concern,” Zeitz said on a call with analysts. Harley has struggled to deliver what it needs authorized dealerhe say.

Harley was forced to halt production and deliveries for two weeks in May and June because of “regulatory compliance issues” with a part from one of its suppliers. At the time, Harley told investors it would be able to make up for lost production in the second half of 2022.

Zeitz is also phasing out U.S. dealers and reclaiming a portion of dealer profits on certain models earlier this year, a move that could help boost margins, according to UBS AG.

Harley maintains its forecast for revenue growth of 5% to 10% in 2022 and an operating income margin of 11% to 12%.

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