Harley Davidson: Shares are up

Harley Davidson

Harley Davidson

Harley Davidson Inc (HOG.N) reported stronger-than-expected quarterly results on Tuesday, helped in part by a rebound at its in-house finance unit, and its shares rose more than 6 percent.

But Harley Davidson warned that the motorcycle market would remain challenging throughout the year. First-quarter net profit tumbled nearly 70 percent to $35.4 million, or 14 cents a share, from $117 million, or 50 cents a share, a year earlier.

But excluding one-time items, Harley Davidson reported a profit of 29 cents a share from continuing operations. On that basis, analysts on average had expected 22 cents a share, according to Thomson Reuters I/B/E/S.

Revenue fell 18 percent to $1.04 billion, excluding financial services. Analyst Ed Aaron at RBC Capital Markets said he was especially impressed by Harley’s gross margins, which were better than expected and provided “an important indicator of the underlying health of the business.”

The results included $26.7 million in operating income from Harley’s in-house finance unit, which snapped a three-quarter streak of losses as the performance of its loan portfolio improved and the cost of funds fell. Worldwide retail sales of new Harley-Davidson motorcycles declined 18.2 percent, a smaller drop than in the prior three quarters.

The brightest spot was international retail sales, which fell just 2.8 percent after posting double-digit declines for a year. Sales in Europe and Canada were both up slightly.

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