Harley-Davidson roars past earnings expectations in the first quarter, sending its share price higher

Billy Bambrough
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A visitor looks at a Harley-Davidson mot
Harley Davidson, the biggest motorbike maker in the US, said sales are struggling under increased competition (Source: Getty)

Motorcycle maker Harley-Davidson has reported a slump in its first-quarter profit to $250.5m (£173m) from $269.8m in the same period last year.

Earnings per share (EPS) hit the gas however, climbing 7.1 per cent to $1.36 from $1.27 last year, beating a poll of 19 analysts by Thomson Reuters who had expected $1.30 per share for the quarter.

Harley shares, which trade in New York under the ticker HOG, were up 2.2 per cent in premarket trading, falling back from an initial acceleration of more than six per cent earlier.

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The motorbike maker also posted higher than expected quarterly sales after more new motorcycles rolled off forecourts around the world, offsetting a decline in its core US market.

Global sales rose 1.4 per cent to 57,458 motorcycles, but US sales slipped 0.5 per cent to 35,326.

The company blamed the US sales dip on increased discounting by competitors and the slump in the price of oil putting pressure on areas of the country that are dependent on the energy sector.

Harley is fighting back however, planning to spend $70m this year on marketing and advertising in the US.

Matt Levatich, president and chief executive, said:

The increased marketing and new product investments are beginning to take hold and we anticipate continued progress across our focus areas as we dial in and ramp-up our approach.

Worldwide shipments of motorcycles rose 4.3 per cent to 83,036 motorcycles in the first three months of the year, slightly above the company's previous forecast of 78,000 to 83,000.

Harley is forecasting shipments of 82,500 to 87,500 motorcycles in the second quarter, compared to 85,172 motorcycles shipped in the same period last year.

For the full year the company reckons it will ship 269,000 to 274,000 motorcycles, up around two per cent from 2015.

Read more: Strong dollar causes Harley-Davidson to hit the breaks

Harley has maintained its full-year 2016 operating margin forecast of around 16 to 17 per cent for its motorcycle division.

The better than expected EPS was largely down to the company repurchasing 3.4m shares of its common stock during the first quarter for $144.6m.

Harley forked out around $1.53bn on share buybacks in 2015, compared with $604m in 2014.

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