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Harley-Davidson Inc. (HOG.N) cut its full-year operating margin outlook and 2019 bike shipment forecast after weak global motorcycle sales and the impact of tariffs dented second quarter earnings.
The Milwaukee-based manufacturer slashed its shipment forecast this year to 212,000 to 217,000, from a previous range of 217,000 to 222,000. Lower shipments also prompted it to reduce its expected 2019 operating margin on its motorcycles to six per cent to seven per cent of revenue, from a previous eight per cent to nine per cent.
Adjusted earnings per share in the second quarter of US$1.46 beat the US$1.41 average analysts expected, and were up from US$1.45 a year ago. But operating income fell 26 per cent in the quarter as the impact of tariffs eroded profits.
Retail sales in the U.S., its biggest market, fell eight per cent, the 10th consecutive quarter of declines, while worldwide sales dropped 8.4 per cent. European deliveries, which had resisted steep declines in recent quarters, tumbled 12.5 per cent.
The iconic motorcycle maker said it won approval from European regulators to ship bikes from Thailand in order to sidestep a 31 per cent tariff on U.S.-made bikes, but the approval process took “considerably longer” than expected.
That delay in obtaining regulatory approval and softer than expected European retail sales were the “key drivers” of the company’s decision to cut guidance for 2019, the company said in a statement.
Shares of the Milwaukee-based bike maker fell 1.6 per cent to US$33.75 a share in pre-market trading.