Harley Davidson's rough ride January 23, 2010 - 8:20AM
Harley-Davidson has reported a fourth-quarter loss, its first quarterly deficit in 16 years, as restructuring costs and the sluggish economy wears on the motorcycle maker.
Harley-Davidson has spent the last year reorganising its business to cope with falling demand of its high-end bikes. It has been laying off employees, closing factories and discontinuing or selling unwanted brands.
The companys results during the quarter ended December 31 were worse than Wall Street was expecting. The company lost money - its first three-month loss since 1993 - even when accounting for only its continuing operations. It also lost money for the full year.
Shares fell $US1.68, or 6.6 per cent, to $US23.90 in premarket trading.
Harley-Davidson said it lost $US218.7 million ($242.6 million), or 94 per share, during the fourth quarter. That contrasts with a profit of $US77.8 million, or US34 cents per share, a year ago.
Its loss from continuing operations amounted to US63 cents per share.
Quarterly revenue tumbled 40 per cent to $US764.5 million from $US1.28 billion a year ago.
Analysts surveyed by Thomson Reuters, whose results typically excluding one-time items, were expecting a loss of US32 cents per share on $US764.4 million in revenue.
The company said it expects to take restructuring charges into 2012. All told, its restructuring efforts will cost $US430 million to $US460 million. For 2010 alone, the cost will be between $US175 million and $US195 million.
Harley-Davidson has been under pressure over the last year as the tight credit markets and the weak economy led consumers to shun purchases of its high-end motorcycles. The company has been aggressively restructuring to cope with what it sees as a weaker market.
Last month, it announced it would close one of its two factories in York, Pennsylvania, and lay off nearly half the unionised workforce there of about 1,950. The York facility is Harleys main motorcycle production centre, making its Touring and Softail bikes.
However, the company got a new, seven-year labour agreement out of the York facility that it said gives it greater flexibility and lower costs.
In October, Harley said it would sell the Italian premium sport-bike maker MV Agusta, which it acquired in 2008 for about $US109 million. It also said it would discontinue its Buell line of sport bikes. Harley said it wanted to focus solely on its namesake motorcycles, on which it generates better returns.
Harley said shipments of its bikes to dealers during the year fell 27 per cent to 223,023. For 2010, Harley said it expects shipments to fall another 5 to 10 per cent to between 201,000 and 212,000 Harley-Davidson motorcycles.
For all of 2009, Harley-Davidson lost $US55.1 million, or US24 cents per share. It earned $US654.7 million, or US$2.79 per share, the previous year.
Yearly revenue fell by more than a fifth to $US4.29 billion from $US558 billion a year earlier.
