The premium motorcycle company Harley-Davidson (HOG), that’s been trying hard to increase its unit sales with a number of initiatives to attract the millennials, beat analysts’ revenue and earnings expectations, while profit took a hit in the first quarter, declining 6.2%. Earnings came in at $174.7 million or $1.03 per share. Revenue increased 2.6% year-over-year to $1.54 billion, with growth being influenced by strong financial services segment results and higher unit revenue. However, profit was hurt by declining unit sales across the board and consolidation costs of the company’s Kansas City manufacturing plant.
The Milwaukee, Wisconsin-based motorcycle manufacturer continues to anticipate incurring $170 million to $200 million in restructuring and other consolidation costs and capital expenditures of about $75 million through 2019. In the first quarter, Harley-Davidson’s costs related to manufacturing optimization were $47.6 million.
“We are pleased to deliver revenue growth on the heels of our recent product investments in Softail and Touring. This, plus solid financial services segment performance and strong cash returns during the first quarter underscore our commitment to drive shareholder value,” said Matt Levatich, President and Chief Executive Officer.
Harley-Davidson has been finding it hard to sell its motorcycles to people due to its higher price points and attract the millennials by introducing new models. The company seems to be addressing these concerns with the introduction of lower priced models and had recently announced the introduction of a new electric motorcycle. However, as the company has been expecting, its retail sales on a global basis declined 7.2%, while overall unit shipments plunged 9.7% year-over-year.
Geographically, US, Canada and Asia Pacific had negative sales results, while Latin America and EMEA were the only two regions to report positive sales increasing 7% and 6.8% respectively. From a unit shipment point of view, US sales nosedived 15.2% to 38,797 units, while international shipments inched up by 0.4% to 25,147.
The company said it is on target and progressing well on its long-term target to build 2 million new riders in the US and an international business growth of 50% of annual volume. Additionally, this summer, Harley-Davidson intends to reveal important steps to better its performance through 2022.
Giving guidance for the fiscal year 2018, the company expects shipments in the range of 231,000 to 236,000, while second quarter 2018 shipments are expected in the range of 67,500 to 72,500.
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