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Apr-17-2008Harley-Davidson to cut jobs, ship fewer motorcycles(topic overview)
CONTENTS:
- A poll by Thomson financial has analysts expecting a profit of 77 cents per share on revenue of $1.23 billion. (More...)
- STOCK PERFORMANCE: Harley-Davidson shares fell about 20 percent during the quarter. (More...)
- Harley-Davidson's planned reduction of its workforce by 730 workers is expected to happen in the second quarter of 2008, which runs through June, the company said this morning. (More...)
- Robert W. Baird analyst Craig Kennison said the production cut will help protect the brand because dealers won't be flooded with bikes. (More...)
- Shares of Harley-Davidson were down $1.14 at $35.65 in midday trading Thursday. (More...)
- Earnings per share rose to 79 cents a share from 74 cents a share, due to a lower outstanding share count. (More...)
- Robin Farley, an analyst at UBS, characterized the forecast revision as a "massive guidance cut." (More...)
- Dealers have reported that the company's finance arm, in an effort to tighten up credit standards and ease concerns on Wall Street, has lowered the amount of money it will lend buyers to just 100 percent of the cost of a new bike. (More...)
- Harley-Davidson Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, general merchandise and related services. (More...)
- The stock was up 18 cents just before 8:50 am ET, advancing to $2.68. (More...)
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A poll by Thomson financial has analysts expecting a profit of 77 cents per share on revenue of $1.23 billion. Worldwide retail sales of Harley-Davidson motorcycles were down 5.6 percent in the quarter, and 12.8 percent in the U.S. The company says it will ship up to 27,000 fewer bikes this year. [1] "With growing weakness in the economy, U.S. retail sales of Harley-Davidson(R) motorcycles were down 12.8 percent in the first quarter. Although these retail results are disappointing, Harley-Davidson's U.S. dealers outperformed the heavyweight motorcycle industry, which was down 14.0 percent," said Jim Ziemer, Chief Executive Officer of Harley-Davidson, Inc. "We've said on a number of occasions that we would closely monitor the retail environment and regularly assess our wholesale shipment plans, and we remain committed to shipping fewer Harley-Davidson motorcycles to our worldwide dealer network than we expect they will sell this year.[2] U.S. retail sales of Harley motorcycles fell 13 percent in the quarter, Chief Executive Officer Jim Ziemer said in conference call. Harley is reducing shipments to dealers because of "U.S. retail trends and uncertainty about the future of the economy,'' he said.[3]
The decision to cut back was made in light of U.S. retail trends and uncertainty about the future of the economy, Chief Executive Officer Jim Ziemer said in a written statement. Harley said it expects 2008 motorcycle shipments of between 303,500 and 307,500, which would be down at least 23,000 from its 2007 shipments. The company also slashed its 2008 earnings guidance to between $3 and $3.18 per share, which would fall below 2007 earnings and far below analyst expectations.[4] MILWAUKEE (AP) - Motorcycle maker Harley-Davidson is cutting 8 percent of its workforce and says jobs will be lost at its headquarters in Milwaukee and at its largest plant, in York, Pennsylvania. Chief Executive Jim Ziemer says he hopes employees will take retirement packages. He says there will be 370 union production jobs cut in the next few months. That's because the company is reducing bike shipments due to sales declines in the weakening U.S. economy. Ziemer says 80 percent of those cuts will be in York.[5] Looking forward, it expects the market to remain tough and plans to produce up to 27,000 fewer bikes than last year. Harley said it was "optimistic" about its long-term prospects because of its strong brand identity. Its U.S. sales during the past quarter had been "disappointing", Harley admitted, but the company said it had outperformed the market as a whole. Overseas sales remained strong, rising 17% over the period, but this was not sufficient to stop the firm's profits from falling 2.5% to $192.3m ('97m). Harley is preparing itself for a tough period ahead by cutting 730 jobs, both on the shop floor and in support functions. It will also temporarily shut some of its plants to reflect the slower rate of production. "We believe these actions will better position the company for a business environment that we expect to continue to be challenging," said chief executive Jim Ziemer. He added: "Harley-Davidson is fortunate to be dealing with the current economic environment from a position of financial strength."[6]
MILWAUKEE (AP) — Harley-Davidson Inc. says its first-quarter profit fell 2.5 percent with U.S. motorcycle sales tumbling nearly 13 percent. The motorcycle maker said Thursday it'll cut back on bike production this year, idle plants and cut 730 jobs.[1] MILWAUKEE (AP) — Harley-Davidson Inc. will cut its workforce by about 8 percent and curtail shipments of its iconic motorcycles this year after reporting a decline in first-quarter profits Thursday, with domestic sales tumbling nearly 13 percent. The motorcycle maker also cropped its guidance for 2008, saying it expects earnings to fall between 15 percent and 20 percent.[7]
Shipments overseas represented about one-third of the company's total shipments in the most recent quarter. Ziemer said the company has been monitoring sales and would cut shipments to dealers so they wouldn't be stuck with unsold bikes. Harley plans to cut this year's shipments by between 23,000 and 27,000 units. That means the company expects to ship between 303,500 and 307,500 units for the full year, at least 7 percent below last year's 330,619.[7] Harley plans to ship 23,000 to 27,000 fewer motorcycles in 2008 than in 2007, resulting in total planned 2008 shipments of between 303,500 and 307,500 units. "We've said on a number of occasions that we would closely monitor the retail environment and regularly assess our wholesale shipment plans and remain committed to shipping fewer Harley-Davidson motorcycles to our worldwide dealer network than we expect they will sell this year," Ziemer said.[8] By now, you're probably tired of hearing me rail against Harley's rising inventories, right? Well, you're in luck. After badly missing estimates last quarter, selling fewer choppers and earning fewer profits, management has finally come around and decided to take action to chop its inventory levels. CEO Jim Ziemer assured us that: "For 2008, the company once again plans to ship fewer Harley-Davidson motorcycles than it expects its worldwide dealer network to sell." Whether you like the idea or not, it's hard to argue that what Harley's been doing has worked. At every level of the income statement, rolling gross, operating margins, and net margins continue their 18-month-long slide.[9]
Worldwide retail sales of Harley-Davidson motorcycles fell as well, down 5.6 percent in the quarter, compared to 12.8 percent in the U.S. But Chief Executive Jim Ziemer noted the company outperformed the U.S. heavyweight motorcycle market, which saw sales drop 14 percent in the quarter.[7] Motorcycle Retail Sales Data During the first quarter, worldwide retail sales of Harley-Davidson motorcycles decreased 5.6 percent compared to the prior year quarter.[10] Retail sales of Harley-Davidson motorcycles increased 16.8 percent in international markets during the first quarter of 2008 compared to the first quarter of 2007.[10] U.S. retail sales of Harley-Davidson motorcycles were down 12.8 percent in the first quarter.[8] In the U.S., retail sales of Harley-Davidson motorcycles decreased 12.8 percent for the quarter while the heavyweight motorcycle industry in the U.S. decreased 14.0 percent.[10]
Motorcycles and Related Products Segment - First Quarter Results Revenue from Harley-Davidson motorcycles was $1.02 billion, an increase of $125.7 million or 14.1 percent versus the same period last year.[10] Shipments of Harley-Davidson motorcycles totaled 71,868 units, an increase of 4,107 units or 6.1 percent compared to last year's first quarter.[10]
First quarter diluted earnings per share (EPS) were $0.79, a 6.8 percent increase compared to last year's $0.74.[10] The Milwaukee, Wisconsin-based maker of heavyweight and sport motorcycles as well as accessories said first quarter net income declined 2.5% to $187.58 million from $192.31 million in the prior-year quarter, while on a per share basis, earnings grew 6.8% to $0.79 from $0.74 in the year-ago quarter.[11] Under the Financial Services segment, Harley-Davidson Financial Services or HDFS, reported first-quarter operating income of $38.9 million, sharply down 40.8% from $58.94 million in the year-ago quarter, mainly due to a reduction in income from securitization. During the first quarter, Harley-Davidson repurchased 2.6 million shares of its common stock at a cost of $100.1 million.[11] For the full year of 2008, capital expenditures are now expected to be between $235 million and $250 million. Stock Repurchase The Company repurchased 2.6 million shares of its common stock at a cost of $100.1 million during the first quarter of 2008.[10] Harley was expected to earn 77 cents a share, the average of 17 analyst estimates compiled by Bloomberg. Harley repurchased 2.6 million shares of its common shares at a cost of $100.1 million during the first quarter, the company said.[3]
Net income in the latest quarter was $187.6 million, or 79 cents a share, compared with $192.3 million, or 74 cents, a year earlier, Harley said today in a statement.[3] Net income for the quarter ended March 30 totaled $187.6 million, or 79 cents per share, compared with a profit of $192.3 million, or 74 cents per share, a year ago.[1]
As of the end of the quarter, there were 20.5 million shares remaining on two board-approved share repurchase authorizations. In its fourth quarter, Harley-Davidson's net income fell to $186.08 million or $0.78 per share from $252.43 million or $0.97 per share in the prior-year quarter.[11]
Harley-Davidson reported first-quarter net income of $187.6 million, compared to $192.3 million in the year-ago quarter.[12] Net income for the quarter was $187.6 million compared to $192.3 million, a decrease of 2.5 percent compared to the first quarter of 2007.[10] First-quarter net income for Harley-Davidson (NYSE: HOG) slid 2.5 percent to $187.6 million compared with $192.3 million for the same period a year ago.[8]
"The Company will also be reducing the non-production workforce by about 360 jobs. We believe these actions will better position the Company for a business environment that we expect to continue to be challenging. The release says that Harley actually increased its first-quarter revenues by $125,700,000 compared to the same period of 2007, but its net income in this part of the year is $5,000,000 less than last year.[13] Income Tax Rate The Company's first quarter effective income tax rate was 36.0 percent compared to 35.5 percent in the same quarter last year. This increase was due to the expiration of the federal research and development tax credit as of December 31, 2007. Assuming the retroactive reinstatement of this tax credit, the Company expects its full year effective tax rate in 2008 will be 35.5 percent.[10] Gross margin for the first quarter of 2008 was 36.4 percent of revenue compared to 35.9 percent for the first quarter last year.[10] Revenues for the first quarter rose 10.8% to $1.31 billion from $1.18 billion in the same quarter last year.[11]
Parts and Accessories revenues totaled $181.94 million, 3.3% lower than $188.24 million in the prior-year quarter, while revenues from General Merchandise rose 10.4% to $84.01 million from $76.11 million in the comparable quarter last year.[11]
Revenue from Parts and Accessories (P&A;), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $181.9 million, a decrease of $6.3 million or 3.3 percent versus the year-ago quarter.[10] Revenue from General Merchandise, which consists of MotorClothes(R) apparel and collectibles, totaled $84.0 million, an increase of $7.9 million or 10.4 percent over the year-ago quarter.[10]
Revenue for the quarter was $1.31 billion, compared to $1.18 billion in the year-ago quarter, a 10.8 percent increase.[8] On a segmental basis, under the Motorcycles and Related Products segment, revenues from Harley-Davidson motorcycles was $1.02 billion, 14.1% higher than $0.89 billion in the year-ago quarter.[11]
The earnings beat the expectations of analysts, who were looking for a profit of 77 cents per share on revenue of $1.23 billion, according to a poll by Thomson Financial.[7] On average, sixteen analysts polled by First Call/Thomson Financial expected earnings of $0.77 per share in the quarter.[11]
"For 2008, the Company now expects earnings per share to decrease between 15 and 20 percent compared to 2007 resulting in expected earnings per share of $3.00 to $3.18," said Ziemer. This supersedes all previous guidance on earnings per share and other measures.[10] The company, whose shares fell more than 7 percent in pre-market trading, expects earnings to fall 15 percent to 20 percent in 2008, resulting in earnings of $3.00 to $3.18 per share. It previously forecast growth of 4 percent to 7 percent in 2008, which translated into $3.89 to $4.00 per share.[14]
The Milwaukee-based company also predicted 2008 earnings per share will drop as much as 20 percent as it cuts jobs and reduces shipments to dealers.[3] Previously, the Milwaukee-based company had said it expected moderate revenue and earnings per share growth of between 4 percent and 7 percent.[7] Earlier, the company said it expects 2008 earnings per share growth rate of 4% to 7% compared to 2007.[12] Earlier, the company said it expects 2008 earnings per share to grow at a rate of 4% to 7% compared to last year.[11]
For fiscal 2008, Harley-Davidson now expects earnings per share in the range of $3.00 to $3.18, down 15% to 20% from last year.[11]
Harley previously said earnings would grow enough to achieve at least $3.89 cents per share in 2008.[4] Earnings per share in the quarter were 79 cents, a 6.8 percent increase compared with 74 cents for the year-ago period.[8] Diluted earnings per share were 79 cents, up from 74 cents in the same period of 2007, Harley announced.[4] On a per share basis, earnings rose 6.8% and beat analysts' estimate by two cents.[11] On average, seventeen Wall Street analysts estimate earnings of $3.62 per share for fiscal 2008.[11]
The following is a summary of key developments and analyst opinion related to the period. OVERVIEW: The iconic motorcycle maker benefits from its strong brand recognition and loyal customer base, as well as its growing appeal outside of the United States. Soaring gas prices and slumping consumer confidence have cut into the Milwaukee-based company's U.S sales in recent quarters and are expected to weigh on its earnings and share price through much of 2008.[15] Harley-Davidson Inc. will cut more than 700 jobs as it throttles back motorcycle production amid weaker sales, the Milwaukee-based company announced today.[4] The slowing U.S. economy has hurt sales of Harley-Davidson motorbikes and forced the iconic company to reduce production and cut jobs.[6]
The company blamed a downturn in the U.S. economy, particularly a 12.8 percent drop in the sale of new motorcycles in the United States in the first quarter of 2008.[16] ANALYST TAKE: "While it looks like Harley-Davidson (nyse: HOG - news - people )'s launch of new products in first quarter 2008 was a success, the weak economy could be negatively affecting sales of core Sportster and Touring models," Felicia Hendrix of Lehman Brothers (nyse: LEH - news - people ) wrote in a note to investors.[15]
Chief Executive Officer Jim Ziemer states that on the tail end of a first quarter where sales dropped 12.8%, it has to cut 730 jobs.[13] First quarter retail sales increased 31.1 percent in Canada; the Europe Region was up 7.8 percent; the Asia Pacific Region was up 19.5 percent; and the Latin America Region was up 53.3 percent.[10]
Sales during the quarter rose 10.8 percent to $1.31 billion. Harley's results were also pulled down by its in-house financing arm, where operating income plunged nearly 41 percent because the turmoil in credit markets reduced income from the loans the unit securitizes.[14]
WHATS AHEAD: In January, Harley-Davidson said it expected to post earnings-per-share and revenue growth of 4 percent to 7 percent for 2008, though some analysts have speculated that the company may soon need to cut that forecast in light of slumping sales.[15] Harley-Davidson has drops in sales and net revenue to start the year, so it's cutting jobs.[13]
MILWAUKEE -- Harley-Davidson Inc. will cut its work force by about 8% and curtail shipments of its iconic motorcycles this year after reporting a decline in first-quarter net income Thursday.[17] The dip came after the company reported a decline in first-quarter net income, a rise in earnings and cut its 2008 fiscal year earnings outlook.[12]
Harley cuts outlook, to slash output : U.S. Business said on Thursday it would report full-year earnings well below its forecast, slash production and lay off hundreds of workers as the U.S. economic slowdown crimps demand for its iconic motorcycles[18] CHICAGO (Reuters) - Harley-Davidson Inc (HOG.N: Quote, Profile, Research ) said on Thursday it would report full-year earnings well below its forecast, slash production and lay off hundreds of workers as the U.S. economic slowdown crimps demand for its iconic motorcycles.[14]
Harley-Davidson has about 5,600 production workers and 3,560 non-production workers, spokesman Bob Klein said. "I believe these decisions are the right ones for the longterm interest of all of our stakeholders during what we expect to be a continued tough retail environment in the U.S. throughout 2008," Ziemer told analysts on a conference call.[7] In view of U.S. retail trends and uncertainty about the future of the economy, we now plan to ship 23,000 to 27,000 fewer Harley-Davidson motorcycles in 2008 than we shipped in 2007, resulting in total planned 2008 shipments between 303,500 and 307,500 units," Ziemer said.[10] Worldwide retail sales of Harley-Davidson motorcycles decreased 5.6% year-over-year, with a 12.8% fall in U.S. retail sales.[11] In the international markets, the retail sales of Harley-Davidson motorcycles grew 16.8%, with Canadian sales jumping 31.1% and European sales rising 7.8%.[11]
April 17 (Bloomberg) -- Harley-Davidson Inc., the biggest U.S. motorcycle maker, said first-quarter profit fell 2.5 percent as U.S. sales declined.[3] Jim Ziemer, Harley-Davidson's CEO called the results "disappointing," but said that Harley-Davidson's U.S. dealers outperformed the heavyweight motorcycle industry, which was down 14 percent.[8]
STOCK PERFORMANCE: Harley-Davidson shares fell about 20 percent during the quarter. This year, the company's shares are down about 24 percent. [15] The motorcycle maker fell 69 cents, or 1.9 percent, to $36.10 at 11:07 a.m. in New York Stock Exchange composite trading. The stock dropped 21 percent this year through yesterday.[3] Harley shares are traded on the New York Stock Exchange under the ticker symbol HOG.[4]
In January, Harley had forecast profit per share for the year to rise as much as 7 percent. "They are at the epicenter of a perfect storm: higher energy prices, weak consumer spending and unfavorable credit conditions for consumers,'' said Richard DeKaser, chief economist at National City Corp. in Cleveland. Harley's product "is a discretionary item,'' he said.[3] Harley said it will implement temporary plant closings, affecting 370 unionized workers. The motorcycle maker also plans to eliminate 360 non-production jobs, or about 10 percent of staff in its North American operations, Chief Financial Officer Thomas Bergmann said in a conference call today.[3] The company, which said it plans temporary plant shutdowns, did not say where it would cut the more than 700 jobs. Harley employs about 3,200 people at its Springettsbury plant. It is also cutting about 360 non-production employees, or about 10 percent of its North American non-production workforce.[16] To achieve the cuts, Harley will temporarily idle plants and change daily production rates, Ziemer said. These changes will result in the loss of about 370 unionized employees over the next several months, he said. The company did not say where those cuts would be.[7] A reduction of shipments of new Harley-Davidson will force "temporary plant shutdowns and adjustments to daily production rates," says Ziemer in a news release. "This will result in a decrease of about 370 unionized employees over the next several months. Our management group and union leaders will work together to implement this reduction."[13] In order to achieve the shipment reduction, the company plans temporary plant shutdowns and adjustments to daily production rates. This will result in a decrease of about 370 unionized employees over the next several months.[11]
The company did not provide any further details on the plant shutdowns. About 370 hourly production workers and 360 non-production employees will lose their jobs over the next several months as a result, Ziemer said.[8] Harley also has plants in Kansas City and Wisconsin. Ziemer says it's not clear how many jobs will be lost in those places. Harley's also cutting 360 non - production jobs, and Ziemer says many of those will be at headquarters in Milwaukee.[5]
Harley expects to ship 23,000 to 27,000 fewer bikes in 2008 than it did in 2007 and would temporarily shut down some plants in the coming months. It said 370 unionized employees and 360 non-factory employees would lose their jobs.[14]
The company plans to ship fewer Harley-Davidson motorcycles in 2008 than it expects the worldwide dealer network to sell.[11] For the second quarter, the company expects to ship between 76,000 and 80,000 units of Harley-Davidson motorcycles.[11]
Company Reduces Full Year Shipments and Revises Guidance MILWAUKEE, April 17 /PRNewswire-FirstCall/ -- Harley-Davidson, Inc. (NYSE: HOG ) today announced its results for the first quarter ended March 30, 2008.[10] Shipments in the first quarter of 2007 were affected by a strike at Harley-Davidson's production plants in York, Pa., that resulted in approximately four weeks of lost production at the facilities.[10]
Harley-Davidson Inc. reports earnings for the fiscal first quarter on Thursday.[15]
The results for the first quarter were calculated on 237.25 million outstanding shares, compared to 258.16 million outstanding shares in the year-ago quarter.[11] Income from operations for the first quarter marginally edged up to $291.05 million from $289.24 million in the year-ago quarter, while total operating expenses rose to $214.53 million from $187.80 million in the prior-year quarter.[11]
Cash flow from operations was $146.8 million and capital expenditures were $43.2 million during the first quarter of 2008.[10]
Operating margin remained unchanged at 20.0 percent in the first quarter of 2008 compared to the prior year.[10]
The news came as Harley reported a first-quarter net profit of $187.6 million compared with $192.3 million last year.[14] Gross profit for the quarter was $476.14 million, up from $423.05 million in the comparable quarter a year ago.[11]
Revenue for the quarter rose 10.8% to $1.31 billion from $1.18 billion in the prior year quarter.[12] Revenue increased 10.8 percent to $1.31 billion from $1.18 billion a year ago.[7]
Twelve Wall Street analysts had a consensus revenue estimate of $1.23 billion.[11]
The average earnings estimate for 2008 was $3.62, according to Thomson Financial data reported by Yahoo! Finance. Harley also announced first-quarter earnings today, and those beat the expectations of stock analysts.[4] After five straight quarters of squeaking past analyst estimates, the hogmeister finally wiped out last quarter, "missing earnings" by nearly a nickel. Will it pick itself up, dust off its chaps, and get back in the saddle in fiscal 2008? We'll get our first clue when Harley reports first-quarter earnings Thursday morning.[9]
Harley's domestic sales, often taken as a broad measure of consumers' willingness to buy expensive discretionary items, tumbled nearly 13%. The motorcycle maker also cropped its guidance for 2008. It expects earnings to.[17] The Milwaukee-based motorcycle manufacturer also reported that it expects full-year per-share earnings to drop as much as 20 percent.[8]
The company expects to ship between 23,000 and 27,000 fewer motorcycles in 2008 compared to 2007, or between 303,500 and 307,500 motorcycles.[16] The company expects fewer shipments in 2008 as it expects the softness in U.S. economy to continue in 2008.[11] Going ahead, Harley-Davidson said it expects the U.S. economy to continue to be very challenging in 2008.[11]
"Harley-Davidson has enjoyed very strong growth over a number of years for many reasons," including a quality product and brand loyalty, Lloyd said. The diversity of the local economy means other industries could pull the region up even as Harley struggles, he said.[4]
Harley sold 14% fewer bikes in the U.S. in the first three months of the year than in the same period in 2007.[6] U.S. shipments marginally declined to 47,826 units from 48,740 units in the previous-year quarter, while export rose to 24,042 units from 19,021 units in the same quarter of last year.[11]
Harley-Davidson's planned reduction of its workforce by 730 workers is expected to happen in the second quarter of 2008, which runs through June, the company said this morning. Harley-Davidson's planned reduction of its workforce by 730 workers is expected to happen in the second quarter of 2008, which runs through June, the company said this morning. Harley-Davidson is reducing its workforce by about 370 unionized employees, or about 6.5 percent of its North American unionized workforce. [16] International retail sales rose 17 percent, led by increases in Canada, Asia-Pacific markets, and Latin America, the company said.[3] Heavyweight Market Data Data Through Month Indicated 2008 2007 United States (1) (March) 93,155 108,337 Europe (2) (February) 47,764 39,785 (1) - United States industry data includes 651+cc models, derived from submission of motorcycle retail sales by each major manufacturer to an independent third party. (2) - Europe data includes Austria, Belgium, Denmark, Finland, France, Germany, Greece, Italy, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, and the United Kingdom.[10]
Robert W. Baird analyst Craig Kennison said the production cut will help protect the brand because dealers won't be flooded with bikes. "It represents an effort to protect the scarcity value of the Harley-Davidson brand, which was diminished, in our view," he wrote in a research note, saying that more bikes were selling below suggested retail prices. [7] "We view the production cut favorably," the Baird analysts wrote. "It represents an effort to protect the scarcity value of the Harley-Davidson brand. It also provides investors with more realistic guidance."[4]
The cuts will include 370 unionized production jobs and 360 non-production jobs.The company's announcement did not say where the jobs would be cut.[4]
Ziemer, Chief Executive Officer of Harley-Davidson, said, 'The Company will also be reducing the non-production workforce by about 360 jobs.[12] Harley-Davidson Chief Executive Officer Jim Ziemer said the company is one of many fighting tough economic conditions.[16] Commenting on the future, chief executive officer of Harley-Davidson, Jim Ziemer said, "Harley-Davidson is fortunate to be dealing with the current economic environment from a position of financial strength.[11]
Shares of Harley-Davidson were down $1.14 at $35.65 in midday trading Thursday. [8] Harley shares were trading down $2.79, or about 7 percent, at $34.50 ahead of the opening bell.[18] Shares quickly dipped to a 52-week low of $34.10, but were trading at $35.62 by midmorning, still down 3 percent from Wednesday's closing price.[7]
In Thursday's regular trading session, HOG is trading at $36.22, down $0.57 or 1.55% on a volume of 2.46 million shares.[11]
On March 30, 2008, the Company had 236.5 million shares of common stock outstanding.[10] As of March 30, 2008, there were 20.5 million shares remaining on two board-approved share repurchase authorizations.[10]
Earnings per share rose to 79 cents a share from 74 cents a share, due to a lower outstanding share count. [14] Analysts had expected 77 cents per share on average, according to Yahoo! Finance.[4]
Robin Farley, an analyst at UBS, characterized the forecast revision as a "massive guidance cut." The company blamed the shortfall on economic difficulties in the United States, its biggest and most important market, where a housing market slump and a related tightening in credit markets have forced U.S. consumers to rein in spending. [14] The company also anticipates cutting a total of 730 jobs in 2008. In view of the shipment reduction, the company slashed its earnings forecast for 2008.[11] The advance came after the company raised its first-quarter and 2008 fiscal year revenue and earnings guidance above consensus.[12] A 3.3-percent decline in parts and accessories revenue also weighed on the company earnings.[18]
Dealers have reported that the company's finance arm, in an effort to tighten up credit standards and ease concerns on Wall Street, has lowered the amount of money it will lend buyers to just 100 percent of the cost of a new bike. In the past, it was willing to give loans that were 130 percent of the cost of the bike, which gave customers money to customize their bikes with saddlebags, extra chrome and other high-margin add-ons. [18] The 105-year-old motorcycle company is grappling with a slowdown in consumer spending amid tighter credit and a faltering economy, which has eroded demand for the company's premium bikes.[3] Harley plans total 2008 motorcycle deliveries of 303,500 to 307,500, the company said.[3] Harley-Davidson now plans to ship between 303,500 and 307,500 units of Harley-Davidson motorcycles in 2008, down 23,000 to 27,000 units from that shipped in fiscal 2007.[11] Motorcycle maker Harley-Davidson is cutting 8 percent of its workforce and says jobs will be lost at its headquarters in Milwaukee and at its larges.[5] "The Company will also be reducing the non-production workforce by about 360 jobs. We believe these actions will better position the Company for a business environment that we expect to continue to be challenging," Ziemer said.[10]
Harley-Davidson Motor Company produces heavyweight motorcycles and offers a line of motorcycle parts, accessories, general merchandise and related services. [10] The heavyweight motorcycle market in the U.S. was down 14% during the quarter.[11] U.S. sales were down in the high teens in the past six weeks, Citigroup analyst Greg Badishkanian wrote in a research note. Given those trends, he said the drop in Harley's guidance may not be low enough.[7] The production cuts will occur over the next several months in consultation with union leaders, according to Harley.[4] Besides slowing production overall, Harley reported it would also have more temporary plant shutdowns like the one that idled the local factory during the week after Thanksgiving in 2007.[4] Ziemer said the shipment reduction will occur through temporary plant shutdowns and adjustments to daily production rates.[8]
The stock was up 18 cents just before 8:50 am ET, advancing to $2.68. If pre-market gains hold, the stock will open at its highest level since late March. [19] Cash Flow Cash and marketable securities totaled $333.2 million as of March 30, 2008.[10]
SOURCES
1. The Associated Press: Harley-Davidson cuts shipments, jobs as 1Q profit skids
2. SunHerald.com : Harley-Davidson Reports First Quarter Results
3. Bloomberg.com: Worldwide
4. Business News for the Central Pennsylvania region including the Harrisburg, York and Lancaster areas - CentralPennBusiness.com
5. MyFox N.E. Wisconsin | Harley-Davidson Cutting 730 Jobs
6. BBC NEWS | Business | Uneasy ride for Harley-Davidson
7. The Associated Press: Earns Harley Davidson
8. Harley-Davidson to cut jobs, ship fewer motorcycles - The Business Journal of Milwaukee:
9. Foolish Forecast: Harley-Davidson Tunes Its Inventory
10. Harley-Davidson Reports First Quarter Results
11. Harley-Davidson Q1 Profit Declines On Weak U.S. Sales; Revenues Up 10.8%; EPS Up, Beats Estimate; Slashes FY08 EPS Outlook - Update [HOG] - RTTNews, Today's Top Stories, Global Newswires, ToDay's Top News,Global Business news .
12. RTTNews - Global financial news, Hot Stocks, Stock Splits, Long Term Stocks.
13. Harley To Cut 730 Jobs | Newsradio 620 - Milwaukee, Wisconsin News, Talk, Sports, Weather | Local Headlines
14. Harley cuts outlook, to slash output | Reuters
15. Earnings Preview: Harley-Davidson may feel economy's bite - Forbes.com
16. Harley Davidson to cut 730 jobs - Evening Sun
17. Free Preview - WSJ.com
18. Harley cuts outlook, to slash output : US Business
19. RTTNews - Global financial news, Hot Stocks, Stock Splits, Long Term Stocks.
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