Harley Weighed Down by Margin Worries

The Milwaukee-based motorcycle maker's shares tumbled Tuesday as investors fretted about disappointing profit margins and sales. The worry outweighed a solid financial performance for the third quarter, in which Harley's net income more than doubled. On the New york Stock exchange, Harley shares were down 8. 2%, or $3. 04, to $34. 17 in midafternoon trading Tuesday.

Disruptions in production at the company's York, Pa., plant led to fewer sales of some of Harley's larger and higher-margin motorcycles. Lower-margin products, such as the smaller Sportsters made at Harley's plant in Kansas City, Mo., took up some of the slack.
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The York plant has had frequent stoppages as the company adjusts to what it expects will be a more efficient process in which a single production line handles a broad range of products that used to have separate lines. Production in York has moved into a single facility from more than 20 separate buildings.

But the transition has been rocky, as Harley expected, said Keith Wandell, chief executive officer. "It's brain surgery, " he said in an interview. "It's not a torn ligament in the knee. " Workers are going through "massive training and learning on the job, " he said, as they master a broader range of skills needed for more flexible manufacturing. He said disruptions will continue over the next year but should diminish as the company gets used to new working arrangements.

"Are we disappointed that things haven't been perfect? Yes, " he told analysts. "But I will tell you we are pleased with where we are in this transformation, " which also will involve increased ability to use temporary workers. Craig Kennison, an analyst at Robert W. Baird & Co., a financial services concern in Milwaukee, said that he views the headaches in York as temporary and that the long-term outlook is good as Harley taps more buyers overseas.UGG Greenfield
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Harley said net income in the latest quarter, ended Sept. 25, was $183. 6 million, or 78 cents a share, up from $88. 8 million, or 38 cents a share, a year earlier. Analysts had expected earnings of around 76 cents a share for the latest quarter. Without the benefit of an unusually low tax rate for the quarter, Harley would have fallen short of earnings expectations, analysts said. Restructuring costs dropped to $12. 4 million from $67. 5 million a year earlier.

Gross profits were 33. 7% of revenue in the latest quarter, down from 34. 9% a year earlier. Some analysts had expected a margin of about 37%. For the full year, Harley projected gross margins of about 34%, down slightly from an earlier projection of 34. 5%. The company blamed the recent strength of the dollar, which lowers the dollar value of overseas sales.

Sales of motorcycles and related products climbed 13% to $1. 23 billion. That fell short of an 18% forecast by Barclays. Revenue from financial services, involving the financing of motorcycle sales, declined 5% to $164. 6 million but financial-services operating profit grew 22% to $62 million as provisions for credit losses declined.UGG Mayfaire
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In the latest quarter, sales of new Harley motorcycles by dealers world-wide were up 5. 1% from a year earlier to 61, 838 units. About 31% of those sales were outside the U. S. Sales surged 28% in Latin America, partly reflecting a rebound in Brazil, where Harley has set up a new dealer network.

Global sales of used Harley motorcycles were up more than 10% in the eight months through August, Harley said, without providing further details. Harley said prices of used models have risen as the supply shrinks. The 2008-09 recession created a glut of used bikes as jobless riders sold their bikes or lost them to repossessions.
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WHAT does this have to do with milksharing???

WHAT does this have to do with milksharing???