By Bob Tita
Harley-Davidson Inc. delivered on its strategy to increase profit by curbing motorcycle production and costs.
The manufacturer reported a 39% increase in third-quarter profit on Tuesday despite selling 8% fewer bikes than a year earlier. Chief Executive Jochen Zeitz is scaling back overseas expansions, eliminating slow-selling models and lowering inventory at bike dealers to sharpen Harley's focus on best-selling models in markets with the strongest sales.
The company's shares rose 26% to $36.57.
The Milwaukee-based company is delaying or abandoning models aimed at younger riders and customers overseas. Harley said it will exit 39 markets overseas with low sales and rely on distributors to sell its motorcycles in 17 countries, including in India, where the company is closing its assembly plant.
Harley said India's Hero MotoCorp Ltd. will sell and service Harley's bikes in India. Under a licensing agreement with Hero, Harley will allow Hero to develop and sell motorcycles under the Harley-Davidson brand.
Harley said it will concentrate on about 50 markets -- primarily in North America, Europe and parts of Asia -- that generate a large share of the company's sales and offer the best potential for sales growth.
"We don't want to grow for the sake of growing. We want to grow profitably," Mr. Zeitz said during a conference call with analysts.
As the company retreats from a decade-long effort to expand the brand globally, it has reduced its workforce by about 10% and plans to trim the number of current and planned models in its lineup by a third.
The company said overhead expenses were down 26% during the third quarter. Motorcycle shipments from the company's factory dropped 6% and dealer inventories of motorcycles were down more than a third from a year earlier, the company said.
The quarter's 8% decline in motorcycles sold was driven by a 10% drop in sales volumes in the U.S., the company's strongest market.
The company's market-leading share of big-motorcycle sales in the U.S. slipped to 41% from nearly 50% last year. Harley attributed the decline to the elimination of sales promotions and discounting and a switch in the introduction of new models to January from August.
Demand for motorcycles in the U.S. has been rising as riders look to motorcycling as socially distanced recreation during the coronavirus pandemic. Polaris Inc. said Tuesday that sales of its Indian brand of motorcycles increased more than 40% during its third quarter.
For the quarter ended Sept. 27, Harley said net income rose to $120.2 million, or 78 cents a share, from $86.6 million, or 55 a share, for the year-earlier period. Harley's adjusted profit increased to $1.05 a share, ahead of the 30 cents expected by analysts.
Harley said it generated $964 million in revenue from motorcycles and related products, down from $1.07 billion for the year-earlier period but ahead of the $844 million expected by analysts.
--Micah Maidenberg contributed to this article.
Write to Bob Tita at firstname.lastname@example.org
(END) Dow Jones Newswires