Thursday, Motorcycle manufacturer Harley-Davidson Inc. (HOG) posted a steep decline in second-quarter profit, largely impacted by lower motorcycle shipments and charges related to HDFS. The company also said it would further slash workforce, while lowering its 2009 shipment expectations for Harley-Davidson motorcycles.
Q2 Results
The Milwaukee, Wisconsin-based company's second-quarter net income plunged to $19.8 million or $0.08 per share from $222.8 million or $0.95 per share in the prior year quarter.
On average, 13 analysts polled by Thomson Reuters expected the company to post earnings of $0.24 per share. Analysts' estimates typically exclude special items.
The company noted that the latest quarter results were primarily affected by the planned 27.6% reduction in motorcycle shipments as well as by the one-time reclassification of finance receivables from held-for-sale to held-for-investment and the related $72.7 million non-cash provision to establish the related initial credit loss allowance.
Additionally, the company recorded a $28.4 million non-cash, one-time impairment charge to write off the goodwill recorded in connection with the 1995 purchase of HDFS, due to Harley-Davidson's lower shipment volume projections.
Quarterly net revenues dropped to $1.15 billion from the previous year's revenue of $1.57 billion, falling short of thirteen Wall Street analysts' consensus revenue estimate of $1.18 billion for the quarter.
Business Segments
On a segmental basis, the company's worldwide retail unit sales of new Harley-Davidson motorcycles descended 30.1% from last year, while retail new Harley-Davidson motorcycle sales in the U.S. declined 35.1% and were down 18.2% in international markets versus the previous year. Industry-wide retail sales of heavyweight motorcycles in the U.S. decreased 48.1% for the same period.
The company shipped 58,179 Harley-Davidson motorcycles in the second quarter of 2009, compared to 80,326 motorcycles shipped in the year-earlier quarter and within the company's guidance for the first quarter.
The motorcycles segment generated second-quarter revenue of $808.7 million, down 31.7% from last year's revenue of $1.18 billion, while the financial services segment incurred an operating loss of $62.1 million versus operating income of $37.1 million earned a year ago.
Year-To-Date Highlights
For the six-month period, the company reported net income of $137.1 million or $0.59 per share, compared to $410.4 million or $1.74 per share in the same period of last year.
Year-to-date net revenues fell to $2.44 billion from $2.88 billion reported in the comparable period of the previous year.
Road Ahead
Amid the downturn in the retail motorcycle sales, the company lowered its 2009 shipment expectations for Harley-Davidson motorcycles to between 212,000 and 228,000, reflecting 25%-30% lesser than the 303,479 shipped in 2008. Previously, the company had expected to ship 264,000 - 273,000 motorcycles. Further, the company said it expects to ship 52,000 - 57,000 Harley-Davidson motorcycles in the third quarter.
Citing lowered shipment volume, the company said it would implement a further reduction of about 700 positions in the hourly production workforce in 2009. Harley-Davidson will also reduce the non-production, primarily salaried headcount by an about 300 additional positions, including a reduction at HDFS.
Harley-Davidson plans to offer a voluntary separation incentive package to eligible salaried employees. Recently, the company had announced workforce reductions totaling about 1,400 - 1,500 hourly production positions in 2009 and 2010 and about 300 non-production, primarily salaried positions.
Also, the company now expects the volume reductions and restructuring activities to result in one-time charges of about $160 million - $190 million over the course of 2009 and 2010, an increase of $40 million from earlier estimates, including $50.0 million incurred during the first half of 2009. Harley-Davidson now estimates ongoing annual savings of about $140 million - $150 million, or $70 million greater than previously estimated, upon completion of the announced restructuring actions. Savings in 2009 are now estimated to be $70 million - $85 million.
Stock Performance
Harley-Davidson shares, which have been trading between $7.99 and $48.05 in the past 52 weeks, closed Wednesday's trading session at $17.49.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.