Harley-Davidson Reports Q3 2012 Results
Harley-Davidson reported a profit of $134.0 million dollars over the third quarter of 2012. That represents a 27% decrease from the net profit of $183.6 million reported over the same quarter of 2011, but the drop was an expected result from a planned decrease in third quarter shipments as Harley-Davidson adopts an Enterprise Resource Planning (ERP) manufacturing system at its York, Pa., factory.
The Milwaukee company shipped 52,793 motorcycles in the three months ended Sept. 30, 2012, compared to 61,745 motorcycles in the same period in 2011. Shipments are expected to decrease further over the fourth quarter but Harley-Davidson plans to make up for it with increased production in the new year.
“The third quarter marked a pivotal milestone in Harley-Davidson’s transformation,” says Keith Wandell, chairman, president and chief executive officer of Harley-Davidson. “With the launch of the ERP production system at York, a major piece of our restructuring work is behind us. We are now focused on optimizing the system and look forward to the start of seasonal surge production early next year.”
Despite the 14% decrease in shipments, Harley-Davidson reported just a slight dip in worldwide retail sales. Harley-Davidson reports sales of 61,053 units over the quarter, down from 61,838 motorcycles. The decrease in sales came mainly in the U.S. market where Harley-Davidson reports sales of 40,402 units in the quarter, compared to 42,640 units the year before. Sales increased in all other reporting regions.
“We believe our U.S. dealers’ third-quarter new motorcycle sales were adversely affected by a limited availability of new motorcycles in July, August and early September resulting from the ERP implementation at York combined with the move of Harley-Davidson’s annual new model launch to late August from late July,” says Wandell. “As U.S. dealer inventory returned to more appropriate levels and the new 2013 motorcycles became more available, retail sales responded positively and gained momentum as we exited the quarter.”
Motorcycles and related products generated $1.09 billion in revenue over the quarter, down 11.6% from the $1.23 billion reported in the third quarter of 2011. Revenue from Harley-Davidson Financial Services was also down but reduced expenses led to a net increase in operating income of 16.7% to $72.4 million.
Even with the decrease in net income over the quarter, Harley-Davidson is still expected to see a higher year-end profit than 2011. Net income for the opening nine months of 2012 totaled $553.3 million, compared to a profit of $493.4 million recorded in the same period of 2011.
In spite of the planned decrease in shipments over the third and fourth quarters, Harley-Davidson expects still to ship 245,000 to 250,000 motorcycles in 2012, a 5-7% increase from 2011.