Home Finance Harley-Davidson profit drops on rising costs and chip shortages

Harley-Davidson profit drops on rising costs and chip shortages

by Enochadmin

Harley Davidson bikes are displayed on the market at a showroom in London, Britain, June 22 2018. REUTERS/Henry Nicholls

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April 27 (Reuters) – Harley-Davidson Inc (HOG.N) reported a drop in first-quarter revenue, according to Wall Avenue expectations, as margins on the motorbike maker have been squeezed by greater prices and chip shortages, whereas gross sales have been boosted by international worth will increase.

The Milwaukee-based firm’s shares have been down 1.2% in midmorning buying and selling at $36.20 on the New York Inventory Trade.

The 119-year-old producer, which has been dealing with surging prices for uncooked supplies and logistics, stated it now expects greater enter prices to proceed via the remainder of the fiscal 12 months. Even so, Harley stated it’s seeing sturdy client demand for its bikes.

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The worldwide semiconductor scarcity has not but eased, which has added to margin pressures – pushing the corporate to take care of its outlook for an already prolonged backlog of orders for bikes.

“We’re cautiously optimistic on enhancements within the provide chain atmosphere within the second half of the 12 months. Nevertheless, this stays tough to foretell with certainty,” Chief Govt officer Jochen Zeitz advised analysts on a convention name.

Gross sales from bikes and Harley’s associated merchandise division rose about 6% to $1.3 billion, with the components and equipment enterprise seeing the strongest development of 11%. Provide chain snarls dented motorbike gross sales in North America as manufacturing challenges resulted in decrease vendor inventories, the corporate stated.

“On common, a motorcycle is sitting on the showroom flooring within the U.S. for lower than two weeks, which is a rare discount from Q1 2019, when this (was) extra like 10 weeks,” stated Chief Monetary Officer Gina Goetter.

Harley’s total development outlook stays unchanged as the corporate expects income to proceed its upward trajectory, which has been helped by a mixture of pricing actions and surcharges for its cruisers and longer-range Grand American Touring bikes.

Internet revenue was $223 million, or $1.45 per share, within the first quarter, in contrast with $259 million, or $1.68 per share, a 12 months earlier.

The corporate worth surcharges in international markets have helped offset manufacturing prices and enhance gross sales. Income rose 5% to about $1.50 billion. Demand for bikes stays sturdy as bikes noticed a slight uptick in income of $1.3 million from $1.2 million a 12 months prior.

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Reporting by Bianca Flowers in Chicago and Aishwarya Nair in Bengaluru; Enhancing by Arun Koyyur, Louise Heavens and Jonathan Oatis

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