Harley rises as motorcycle maker cuts spending during sales slump

Bloomberg

Harley-Davidson Inc profit beat estimates as the motorcycle maker pared back spending plans to partially offset shrinking sales in the US, its biggest market. Adjusted earnings fell to
70 cents a share in the third quarter, the Milwaukee-based manufacturer said in a statement Tuesday, exceeding analysts’ average estimate for
67 cents. Harley shares climbed as much as 7.3% in early trading.
Harley trimmed capital-expenditure plans for the year to a range of $205 million to $225 million, dropping both ends of its forecast by $20 million. The company is having to tighten its belt as demand in its home market has slumped for 11 consecutive quarters.
US retail sales fell 3.6%, as the motorcycle maker continues to struggle to attract younger customers and cheaper used bikes erodes demand for new ones. But this was the smallest decline for the company since the fourth quarter of 2016.
CEO Matt Levatich backpedaled on long-term growth targets during an investor day in Milwaukee last month. He now wants to add 1 million new US riders in the decade through 2027, down from 2 million. Still, RBC Capital Markets analyst Joe Spak questioned the feasibility of the less ambitious plan in a report.
Harley managed to temper sales declines in Europe, with a 0.6% dip in the last three months following the 12.5% plunge in the second quarter. Harley plans to ship bikes to the European market from an assembly plant in Thailand to sidestep EU tariffs on US products.
Harley is entering new, smaller bike segments to broaden its appeal globally and electrifying its lineup. While the company halted production of LiveWire — its first battery-powered bike — earlier this month to inspect a charging-related issue, it has resumed production.