Harley-Davidson Beats Profit Estimates

Harley-Davidson - bike

CBJ — Harley-Davidson’s shares have rallied after the American motorcycle maker forecast a lower-than-expected hit to profit margins from President Donald Trump’s trade tariffs and its quarterly earnings topped Wall Street estimates.

The company’s forecast and results raised hopes this year’s profits will hold up better than expected, despite obstacles such as rising raw materials costs, higher tariffs on bikes shipped to Europe and an aging customer base.

The Milwaukee, Wisconsin-based company now expects its motorcycles segment operating margin as a percent of revenue to be about 9% to 10% in 2018, compared with 9.5% to 10.5% it projected earlier.

The drop was on account of higher steel and aluminum costs and a 25% retaliatory duty imposed by the European Union on the shipments from the United States. Those two factors together are estimated to cost Harley $45 million to $55 million this year.

Harley-Davidson has assembly facilities in India and Brazil, and is expected to launch an assembly plant in Thailand in September.

@CanBizJournal

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