HD Net Income Dives 37% in Q3

Harley-Davidson, Inc. revenue for its third quarter ended Sept. 28 fell 7.7 percent to $1.42 billion as the ongoing economic slump dampened motorcycles sales. Net income fell 37 percent to $166.5 million, or 71 cents per share, from $265 million, or $1.07 per share, in the year-ago quarter. Executives expect tougher times ahead.

“Going forward, we expect the global economy and consumer concerns to continue to create challenges for Harley-Davidson through the end of the year and in 2009,” said CEO Jim Ziemer.

Worldwide retail sales of Harley-Davidson motorcycles decreased 9.6 percent compared to the third quarter of 2007, and that was in a quarter that ended just as Congress began debating the bailout package. That package includes an R&D tax credit that H-D will be able to apply for the full year.

U.S. retail sales of Harley-Davidson motorcycles decreased 15.5 percent for the quarter. Sales increased 12.4 percent in Canada; 2.9 percent in Europe; 17.5 percent in the Asia Pacific region; and 41.6 percent in Latin America.

Revenue from Harley-Davidson motorcycles was $1.05 billion, down 11.1 percent versus the same period last year. Shipments of Harley-Davidson motorcycles totaled 74,704 units, a decrease of 11,831 units or 13.7 percent compared to last year’s third quarter.

Revenue from Parts and Accessories (P&A), which consists of Genuine Motor Parts and Genuine Motor Accessories, totaled $259 million, up 3 percent over the year-ago quarter, while revenue from General Merchandise, which consists of apparel and collectibles, totaled $84 million, up 1percent over the year-ago quarter.

Financial Services
Harley-Davidson Financial Services (HDFS) operating income for the third quarter was $35.6 million, a decrease of $13.9 million or 28.0 percent compared to the year-ago quarter. H-D says the decrease resulted primarily due to a $9.4 million write-down of finance receivables held for sale to fair value. In addition, last year’s third quarter included a $3.5 million securitization gain compared to no securitization transaction during the third quarter of 2008.

Nine-Month Results
For the first nine months of 2008, revenue totaled $4.30 billion, down 0.9 percent compared to the first nine months of 2007. Diluted earnings per share were $2.45, a decrease of 16.9 percent compared to the same period last year.

Harley-Davidson motorcycle revenue for the first nine months of the year slumped 2.2 percent to $3.26 billion; P&A revenue totaled $706.6 million, up 0.5 percent; and General Merchandise revenue totaled $244.8 million, up 5.5 percent.

The company says it shipped 226,898 motorcycles during the recently ended nine-month period, down 9.0 percent compared to last year’s 249,413 units. Worldwide retail sales of Harley-Davidson motorcycles fell 6.0 percent – down 11.9 percent in the U.S. but up 12.6 percent in international markets.

HDFS operating income was $107.7 million, a 38.0 percent decrease from last year’s $173.6 million.

For the full year 2008, Harley-Davidson narrowed its shipment expectations to between 303,500 to 306,000 motorcycles. The company also narrowed its expectations for earnings per share for the full year to $3.00 to $3.10 from the prior range of $3.00 to $3.18.

Last year, Harley shipped 330,619 motorcycles, a 5.3 percent decrease from 2006. Full-year retail sales of H-D motorcycles decreased 1.8 percent compared to sales in 2006. The company’s earnings per share were $3.74, down 4.8 percent compared to full-year 2006.