Harley Davidson (HOG - Get Report) posted stronger-than-expected second quarter earnings, and confirmed its full-year shipping guidance, as the iconic American motorcycle maker grapples with fresh European Union tariffs and a war of words with the White House.
Harley Davidson said earnings for the three months ending in June came in at $1.45 share, well ahead of the consensus forecast of $1.34 but down from the $1.48 recorded in the same period last year. Group revenues from motorcycle products fell 3.3% to $1.53 billion, the company said, as worldwide retail sales fell 3.6% and U.S. retail sales fell 6.4%. However, Harley said it will maintain its full-year shipments forecast of between 231,000 and 236,000 motorcycles for the full 2018 fiscal year.
"Our results in the second quarter reflect business performance that is in line with our expectations," said CEO Matt Levatich. "With the focus of every employee and dealer, we are making progress building the next generation of Harley-Davidson riders in line with our long-term objectives. Our manufacturing optimization, demand-driving investments and commitment to manage supply in line with demand remain on target and continue to strengthen our business."
Harley Davidson shares were marked 6.2% higher in the opening hour of trading and changing hands at $44.03 each, a move that trims the stock's year-to-date decline to around 13.5% and value the Milwaukee, Wis.-based group at just under $7 billion.
Harley Davidson was targeted by the European Union last month with fresh import tariffs after President Donald Trump imposed 25% levies on non-American steel and aluminium products earlier in the year. Last month, Levatich cautioned that any imports tariffs would have a "significant" impact on the iconic motorcycle maker's overseas sales.
"If the Americans impose tariffs on steel and aluminum, then we must treat American products the same way," European Commission President Juncker said in May when he hinted at a package of tariffs that could impact $3.5 billion in U.S. exports. "So now we will also impose import tariffs. This is basically a stupid process, the fact that we have to do this. But we have to do it. We will now impose tariffs on motorcycles, Harley Davidson, on blue jeans, Levis, on Bourbon."
The decision prompted Harley Davidson to announce the shift of some of its manufacturing base overseas, a decision President Trump slammed, threatening the group will be "taxed like never before."
Levatich said a new strategy to grow the company's ridership overseas will be unveiled on July 30.
"We will take bold actions that better leverage our vast capabilities and competitive firepower -excellence in product development, manufacturing, brand and our great dealer network," Levatich said. "We will motivate our existing loyal riders and inspire future riders who are not even thinking about two-wheeled freedom."
"We are tapping into the spirit that drove our founders back in 1903. Our plan will redefine existing boundaries of our brand," he added.