Harley outcomes high Wall Avenue forecasts as demand for bikes soars

Electrical bikes by Harley-Davidson and LiveWire are seen at a Harley-Davidson dealership in Queens, New York Metropolis, U.S., February 7, 2022.

Feb 8 (Reuters) – Harley-Davidson Inc reported on Tuesday a pointy leap in income and an surprising revenue for the fourth quarter, boosted byprice hikes and a shift towardsales of higher-margin touring and cruiser bikes, sending its shares up almost 15%.

Within the midst of almost a two-year gross sales drop, Harley reset its technique in 2020 to deal with promoting its high-margin Touring, giant Cruiser and Trike bikes to older and wealthier prospects in markets akin to the USA and Europe.

The Milwaukee, Wisconsin-based firm’s earnings beat will be partially attributed to larger pricing and surcharges which have helped buoy its bike gross sales amid surging uncooked supplies costs and unstable provide chains.

Harley’s total progress outlook assumes that provide chain woes will begin to ease heading into the second half of this yr.

“We anticipate income to be positively impacted by our world pricing actions as we work to offset the price headwinds throughout the availability chain, Harley Chief Monetary Officer Gina Goetter instructed analysts on a convention name.

Worth inflation and surcharges have been restricted to the USA, however firm executives stated stronger pricing dynamics will likely be rolled out to world markets within the new fiscal yr.

“Whereas the demand is there, the availability isn’t, so it looks like the patron will bear the burden of protecting it, stated Jaime Katz, senior analyst at Morningstar.

Harley reported income from motorbike and associated merchandise of $816 million, in comparison with analysts’ estimates of $663.8 million and $531 million within the year-earlier interval. Complete income was $1.02 billion, up from $725 million.

Retail gross sales in the USA, the corporate’s largest market, rose to 18,855 items from 17,274 items.

Web earnings jumped to $21.6 million, or 14 cents per share, within the fourth quarter, in contrast with a lack of $96.4 million, or 63 cents per share, a yr earlier.

Analysts on common had anticipated a lack of 38 cents per share in the newest quarter, in response to Refinitiv.

Harley’s shares have been up 14.5% to $41.36 on the New York Inventory Trade.

The corporate continues to cater to its wealthier buyer base. Its mannequin combine, together with the massive Cruiser, Trike bikes, and sold-out items of its Pan America mannequin, has been essential to sustaining strong U.S. and European gross sales. The Pan America 1250 particular has a beginning price ticket of $19,999.

North American retail gross sales have been up 8% within the fourth quarter in contrast with final yr, pushed partly by 23% progress in gross sales of journey touring fashions in addition to strong gross sales of Harley’s Pan America and Sportster S bikes.

“From the outset, we noticed the potential within the journey touring class – as of at the moment, it’s the second-fastest rising class in North America, Harley Chief Government Officer Jochen Zeitz stated on the decision.

Harley’s full-year income for motorbike and associated merchandise was $4.5 billion, up 39% from $3.3 billion in 2020. Complete income for 2021 was $5.3 billion, up 32% from $4.1 billion within the earlier yr.

Reporting by Abhijith Ganapavaram and Aishwarya Nair in Bengaluru; Enhancing by Shounak Dasgupta and Paul Simao

Our Requirements: The Thomson Reuters Belief Rules.