Not very long ago, Harley Davidson was in critical condition. Sales and profits were in a shambles and the company’s survival was a real question, but it’s beginning to look like they’ve gotten through the worst of it. The economy is still a drag on their business and things could easily turn down, but they’re going in the right direction.
Income from continuing operations was $54.6 million, or $0.24 per share, in the fourth quarter of 2011, compared to a loss of $42.1 million, or $0.18 per share from continuing operations in the year-ago quarter. For the full year 2011, income from continuing operations more than doubled to $548.1 million, or $2.33 per share, compared to income of $259.7 million, or $1.11 per share, from continuing operations in 2010.
The recovery of Harley Davidson is slow and painful, much as it has been for the economy as a whole, but sales are up and profits are up while the reorganization and streamlining undergone over the past few years is paying off. Also to be noted in the table at the bottom of this article, is the sizable portion of retail sales from international markets which underscores the importance of their efforts there.
Highlights from Harley Davidson earnings statement below:
MILWAUKEE, Jan. 24, 2012 — Harley-Davidson, Inc. HOG +0.07% reported a strong finish to 2011, with improved fourth-quarter performance capping a year of earnings and dealer retail sales growth.
Income from continuing operations was $54.6 million, or $0.24 per share, in the fourth quarter of 2011, compared to a loss of $42.1 million, or $0.18 per share from continuing operations in the year-ago quarter. For the full year 2011, income from continuing operations more than doubled to $548.1 million, or $2.33 per share, compared to income of $259.7 million, or $1.11 per share, from continuing operations in 2010.
Retail sales of new Harley-Davidson motorcycles grew 10.9 percent worldwide in the fourth quarter compared to the prior-year period, including an 11.8 percent increase in the U.S. For the full year 2011, new Harley-Davidson motorcycle retail sales rose 5.9 percent worldwide and 5.8 percent in the U.S.
On a segment basis, full-year operating income from Motorcycles and Related Products grew 48.2 percent on higher shipment volume and operating margin improvement, while operating income from Financial Services grew 47.8 percent on continued improvement in credit performance, compared to 2010.
“Our improved performance in 2011 is the result of the tremendous efforts of all of our employees, dealers and suppliers,” said Keith Wandell, President and Chief Executive Officer of Harley-Davidson, Inc.
“Harley-Davidson is all about fulfilling dreams through remarkable motorcycles and extraordinary customer experiences. In 2011 we made strong progress at transforming our business to be more agile and effective than ever at exceeding customer expectations,” Wandell said. “The changes underway across the organization will enable Harley-Davidson to be world class and customer led like never before, with shorter product development lead times, flexible manufacturing and an unmatched premium retail experience.
“At retail, we believe the solid improvement in new Harley-Davidson motorcycle sales reflects the strong appeal of our product lineup to a diverse customer base and the great efforts of our dealers, combined with results from our investments in growth opportunities across all regions and improved consumer confidence in the U.S. While we are encouraged by the retail sales trend, we continue to keep a close watch on the marketplace and remain cautious in our expectations for 2012,” Wandell said.
Retail Harley-Davidson Motorcycle Sales
On a worldwide basis, dealers sold 40,359 new Harley-Davidson motorcycles in the fourth quarter of 2011, a 10.9 percent increase compared to 36,390 motorcycles sold in the year-ago period. Dealers sold 23,753 new Harley-Davidson motorcycles in the U.S., an 11.8 percent increase compared to the fourth quarter of 2010. In international markets, dealers sold 16,606 new Harley-Davidson motorcycles during the fourth quarter, an increase of 9.7 percent compared to the year-ago period.
For the full year, worldwide retail sales of new Harley-Davidson motorcycles increased 5.9 percent to 235,188 units, compared to sales of 222,110 units in 2010. U.S. retail sales of new Harley-Davidson motorcycles increased 5.8 percent to 151,683 units, and in international markets sales increased 6.1 percent to 83,505 units, for the full year compared to 2010. Industry-wide U.S. heavyweight new motorcycle (651cc-plus) retail unit sales increased 4.3 percent for the full year, compared to 2010.
Guidance
Harley-Davidson expects to ship 240,000 to 245,000 motorcycles to dealers and distributors worldwide in 2012, a three-to five-percent increase compared to 2011. In the first quarter of 2012, the Company expects to ship 58,000 to 63,000 motorcycles.
Restructuring Update
In 2011, Harley-Davidson realized cumulative savings from restructuring activities initiated since early 2009 of $217 million, in line with company estimates of $210 million to $230 million. Upon completion, Harley-Davidson continues to expect restructuring activities to generate annual ongoing savings of $315 million to $335 million, beginning in 2014. For the full year 2011, Harley-Davidson incurred one-time restructuring costs of $68.0 million. The Company now expects all restructuring activities initiated since 2009 to result in one-time overall costs of $500 million to $520 million through 2013, including $50 million to $60 million in 2012, a $5 million reduction to the range previously provided.
| MOTORCYCLE SHIPMENTS: | 12 months ended 12/31/2011 |
| Harley-Davidson | |
| United States | 152,180 |
| International | 80,937 |
| Total Harley-Davidson | 233,117 |
| Buell | 274 |
| MOTORCYCLE PRODUCT MIX: | |
| Harley-Davidson | |
| Touring | 92,002 |
| Custom | 91,459 |
| Sportster(R) | 49,656 |
| Total Harley-Davidson | 233,117 |
B50 Jim says
Good to hear the Motor Company is climbing out of the morass, as is the rest of the economy. Reading the report, I surmise that H-D has made some tough decisions and put some long-needed changes into effect. Lacking details, I can guess it meant downsizing, consolidation and reorganizing.
However:
“The changes underway across the organization will enable Harley-Davidson to be world class and customer led like never before, with shorter product development lead times, flexible manufacturing…
The Japanese knew about these factors since the 1960s. The English didn’t figure it out and went on “hiatus” for 30 years. It only took H-D 45 years to learn. Better late than never. I wish them well, but they really should reduce their lead time for making badly-needed changes.
akaaccount says
With near term thinking and short term improvement measures come temporary improvements, no surprise there.
Tin Man 2 says
Two years ago the Haters were shouting that HD was finished, Now its just back to the normal whine of how out of touch they are. LOL. Just who is out of touch around here?? You want a racer, buy one, If you want a Cruizer, get a Harley. The market has something for everyone.
kim says
Now what if you want something that is realiable AND doesn’t cost an arm & a leg & your firstborn son? I love the Harleys, even had one in a more prosperous phase of my life, but they remain overpriced.
HMP says
overpriced? almost a quarter of a million new units were sold last year.
They really arent that much more than the other brands.
Sure, you can buy a $40 elektra glide from them, but their sportsters start at 7 grand new, and many of the bikes are under 25k.
Compare that to BMW and the like and its really not any different.
Quit bitching about the price of them, theres little truth to it
David says
aint it the truth Tin Man; aint it da truth!
todd says
Amazing, 240,000 motorcycles in 2012. Considering a normal work day that’s 120 motorcycles every hour. I feel sorry for the guy lacing spokes. Coming from the automotive industry myself, those sort of volumes should allow some serious cost reductions from vendors which could be used to lower prices and increase sales. For such a mass produced product, as they’re priced now, they must be seeing huge profit numbers. Don’t we wish we could all be in that predicament?
I wonder what sort of cuts were made to have “shorter product development lead times”. It usually takes an investment to achieve that. Otherwise all I can think of is less intensive development projects and under-engineering designs.
Good to hear a company doing well.
-todd
HMP says
just for fun, I checked a few websites
goldwing starts at 24k
http://powersports.honda.com/2012/gold-wing.aspx?CID=LG_MOTORCYCLE_STREET+REPRISE+GOOGLE+LG_GOLD_WING+HONDA$GOLDWING
electra glide starts at 20k
http://www.harley-davidson.com/en_US/Motorcycles/electra-glide-classic.html?locale=en_US&camp_id=16&source_cd=SEM_flhtc&_cr=ppc|google|RETENTION|Harley-Davidson electra glide&version=desktop#/c/specs
victory cross country tour starts at 22k
http://www.polarisindustries.com/en-us/victory-motorcycles/touring/pages/overview.aspx?WT.si_n=VIC-Top_Nav_Enter_2012_Touring_Choose_Bike&WT.si_x=1
so exactly how is harley overpriced? Out of these three they are the cheapest by thousands of dollars.
marc pondick says
i find it hard to compare a harley to a metric bike, apples and oranges. since the us dollar has weakened the metric bike prices have gone up, closing the gap in pricing.as far as bikes go harley is the only brand i know that tries to sell u a moter upgrade before u even ride it off the show room floor ??? harley leak? metric bikes leak too, after 20 years lol really u cant compare a goldwing to an grampaglide, techno speaking harly is still 10 years behind 20 years air cooled cam in block loose tolerence motors are a thing of the past. but but thay give thier customer base what the want, period if it sells make more just like it. go figger got a bridge for sale ?full chrome package comes with a free tee shirt color : black only LOL love to look love ths sound but thats it sorry owned some not impressed give me a 30year old honda anyday I LOVE THE SMELL OF BURNIN RICE.
AlwaysOnTwo says
I haven’t been an HD rider for a long, long time. My preference is for a machine that HD doesn’t build. But, walking into an HD Stealership and gazing at the fit and finish of those bikes is envy inspiring. They are putting out a well finished looking product.
It’s the perfect poser bike, and those that crave that image are willing to ante up.
More power to em.
Tom says
Well, let’s not consider this news in a vacuum. If you inform yourself, you’ll find out just how tough things have been for everybody in the business.
I noticed my local Honda dealer still had new 2009s on the showroom floor, so I checked
http://world.honda.com/investors/financial_data/segment/
and found Big Red’s sales of all “motorcycle” products (street and off road bikes, scooters, quads, and personal watercraft) in North America were 509,000 units in 2007. That has declined every year since, and in fiscal year 2011 they moved just 185,000 units.
Suzuki motorcycle product sales in North America for their 2010 year were 36% lower than an already bad 2009. They sold just 50,000 units.
http://www.globalsuzuki.com/corp_info/financialinfo/pdf/2011/2011all.pdf
Will Silk says
I see a lot of comments regarding the price point of HD models versus the competition. Some even go as far as stating that there is nothing wrong with the price point of HD models, yet in a press release a few weeks ago, the Motor Company commented that they intend to launch into a line of product that is more cost effective for consumers to obtain.
Honda’s recently fired a rather nice shot with the new NC700X. It’s a conservatively styled bike in terms of its contemporary competition, but this is an area that Harley has yet to enter. The adventure bike segment appears to have very strong growth, and the $7000 USD retail price point seems to be a healthy retail point for manufacturers to aim at. With Sportster prices gradually climbing into the low $8K range, the Motor Company needs to quickly install a plan of action to either (A) Curb Sportster pricing from further escalation or (B) Debut a new bike to handle that price segment and move the Sporty up market.
While I’m by no means advocating that an adventure model of the Sportster be undertaken (though Triumph’s Scrambler handles itself well in this realm, so it may not be a bad idea), I do support further development of the Sportster line up, and of course would certainly be interested in anything else that Milwaukee could produce to combat the standard range of bikes in the $6000 to $7000 USD market place.
I continue to feel strongly that HD will remain the top American producer of motorcycles, as Victory has yet to produce a motorcycle for less than $10,000 and despite their product being of equally high quality in terms of build, they simply have not been able to compete with Harley and the established brand marketing that the Milwaukee based manufacturer enjoys.
todd says
I can only imagine how much more discounting Harley and their 250,000 bike projection gets from their vendors than Victory’s roughly 7,000. Victory probably has to pay twice as much for their parts than H-D does. Harley could easily take this cost savings and lower their prices so much to wipe Victory and every other cruiser off the face of the earth.
Increased profits sounds nicer.
-todd