Harley Profit Tops Estimates as Sales Rise Despite Supply Snags

(Bloomberg) -- Harley-Davidson Inc. reported better-than-expected sales and profit in the third quarter as revenue in North America rose despite supply-chain bottlenecks that have limited motorcycle shipments.

Adjusted earnings rose to $1.18 a share from $1.05 in the year-earlier period, the Milwaukee-based company said in a statement Wednesday. Analysts had expected 80 cents a share, according to the average of estimates compiled by Bloomberg. Revenue from motorcycles and related products rose 20% to $1.16 billion.

Chief Executive Officer Jochen Zeitz, a former Puma SE executive who took the helm of the troubled manufacturer in February 2020, has slashed costs, culled dealerships and tightened inventory in order to raise prices. While he’s overseen the launch of successful new models like this year’s Pan America adventure bike, chip shortages, shipping delays and a trade spat with Europe are weighing on his plans for a turnaround.

“We have tactical challenges with supply that are significant, but at the same time we’re executing really well on our longer-term strategies,” Zeitz said on a call with investors. “There are more than a few bright spots.”

Harley shares rose 4.5% to $37.06 at 9:53 a.m. in New York. The shares were down 3.4% this year through Tuesday, lagging the 21% gain in the S&P Midcap 400 Index.

Harley added a surcharge on bike sales in the third quarter to offset rising costs, and Zeitz said he’s “optimistic” that the U.S. and European Union will resolve the trade dispute that is taxing Harley’s exports to the continent.

Retail motorcycle sales rose 2% in North America, the company’s largest market, while declining 6% worldwide as Zeitz shrinks Harley’s global footprint. Deliveries fell 16% in Europe, 41% in Latin America and 15% in Asia. 

Zeitz, a branding whiz who revived Puma in the late 1990s, served as a Harley board member for years before taking over as CEO. In February, he unveiled his “Hardwire” turnaround plan, which calls for investing $190 million to $250 million annually in part to develop Harley’s electrification technology.

The company is aiming for low double-digit growth in earnings per share and “mid single-digit” growth in motorcycle revenue through 2025, Zeitz said in February. Harley plans to achieve that by investing more in its core heavyweight-bike segment -- a category that has been shrinking across the industry -- and by turning its flagship electric motorcycle, LiveWire, into a standalone brand for electric bikes.

Harley sold 103,650 bikes in its home market last year, a 22% drop and the lowest level in at least a decade.

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