Tue. Nov 29th, 2022

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

The Milwaukee-based company reported earnings of $ 1.46 per share, well above the $ 1.02 average of analyst estimates compiled by Bloomberg. Revenues from motorcycles and related products rose to $ 1.27 billion, up from $ 1.25 billion forecast by analysts. Harley stock was up 6.7% at 10:10 am in New York and previously gained 10%, the highest on an intraday basis since the beginning of February.

Zeitz, a former Puma SE executive who took over the helm of the ailing manufacturer in February 2020, cut costs, exited unprofitable markets, and slashed inventory to raise motorcycle prices as part of its reversal plan. “Hardwire” trend. Although he has successfully introduced new models and rounded up excess bicycle inventory, shipping bottlenecks and shortages of parts have limited the growth in sales out of the pandemic.

The upturn in profits also came as global motorcycle sales fell to 50,500, down 23% from the previous quarter. Sales of this measure fell 28%, to 34,900, in North America, Harley’s largest market. Europe fell by 15%, Latin America fell by 8%, and sales in Asia increased by around 1%.

“Demand was strong across the board, but the bikes available in the dealership were the concern,” Zeitz said in a call with analysts. Harley struggled to ship what he had to dealerships, he said.

Harley was forced to stop manufacturing and shipments for two weeks in May and June due to a “regulatory compliance issue” with a part from one of its suppliers. At the time, Harley told investors that she would be able to make up for the loss of production in the second half of 2022.

Zeitz is also eliminating dealerships in the United States and recouping a portion of dealership profits on select models earlier this year, a move that could help support profit margins, according to UBS AG.

Harley maintained its revenue growth forecast of 5% to 10% in 2022 and an operating profit margin of 11% to 12%.

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