Courtesy of Zero Hedge
Harley-Davidson is about to get some more angry tweets from Donald Trump.
This morning the iconic motorbike maker reported numbers that beat on the top and bottom line, with Q2 adj. EPS of $1.52, vs exp. $1.41, while motorcycle/related products revenue in the quarter was $1.53 billion, also above the 1.42 billion estimate.
More troubling was the news that 2Q motorcycle shipments of 72,593 declined 11.3% in the quarter.
But the big problem, and what will likely provoke Trump's fury, is that HOG said its operating margin would drop to between 9 and 10% in 2018; the reason? Tariffs, to wit:
Motorcycles segment operating margin as a percent of revenue to be approximately 9 to 10 percent given the expected impact of tariffs in 2018
Previously, the company had been projecting a margin of as much as 10.5%.
As part of its outlook, the company also said that motorcycle shipments to be approximately 231,000 to 236,000 motorcycles. In the third quarter, the company expects to ship approximately 45,500 to 50,500 motorcycles
Even before it indirectly blamed Donald Trump's policies for its woes, Harley got caught in the crossfire of Trump’s trade war last month when it announced plans to shift some U.S. production overseas to sidestep higher tariffs imposed by the European Union.
In response, Trump attacked the company, claiming it was using the levies as an excuse to send jobs overseas (Harley had previously announced plans to close a factory in Missouri and build one in Thailand). As Bloomberg notes, as a result of the EU's retaliatory tariffs, it will cost about $2,200 extra per motorcycle shipped to Harley’s second-biggest market, the company disclosed in a June 25 filing. The manufacturer hasn’t specified which of its overseas plants will begin producing bikes for European riders.
Fast forward to today, when the company is telling its shareholders to blame Trump if the company's stock slides as margins do the same.