Harley-Daivdson

Strong international growth boosts Harley in 2014 as US motorcycle sales disappoint

IN line with its lowered forecasts for the second half of last year, Harley-Davidson's full-year motorcycle sales were up, but only by a disappointing 1.3 percent in the United States in 2014 - which translates into 171,079 motorcycles sold (63.8 percent of total production), an increase of just 2,216 additional bikes.
Overall, Harley's worldwide motorcycle sales are up by +2.7 percent, but the good news, in motorcycles sales terms (as opposed to shipments, and as opposed to the corporation's financial performance), comes from their international sales, which dramatically improves their overall performance picture.

Total international sales are now a massive 96,920 motorcycles, up by 9.2 percent and accounting for 36.2 percent of total production. Harley's Europe, Middle East and Africa (EMEA) region leads the way with 45,323 motorcycles sold (+6.4 percent), 38,491 of which were sold in Europe itself (+6.7 percent).
The Asia/Pacific region was up by 11.8 percent with 30,074 motorcycles sold (of which 10,775 went to Japanese customers); Harley's Latin American markets were up by +2.1 percent (11,652 motorcycles sold). As AMD’s regular dealer surveys conducted for us by Milwaukee based analyst R.W. Baird had suggested might be the case last year, Harley's Canadian dealers sold 10.8 percent fewer motorcycles than in 2013 (9,871).
Chairman, President and Chief Executive Officer Keith Wandell is nonetheless upbeat in his investor community briefings, preferring to point instead to balance sheet and demographic improvements, while acknowledging the Company's international strength. "Harley-Davidson achieved a great year of financial performance in 2014, with double-digit earnings growth, revenue topping $6 billion and continued strong improvement in margins.

"We also continued to broaden our customer base and expand the reach of our brand through unrivaled products and experiences. In international markets, our dealers in Asia Pacific, EMEA and Latin America posted their highest new motorcycle sales on record for each region, delivering on our expectation for international sales to grow at a faster rate than U.S. sales. And in the U.S., for the third straight year, sales to our outreach customers grew at more than twice the rate of sales to core customers."
"Our success is the result of a clear focus on managing the Company for the long term, building on our well-established strategies and driving continuous improvement in every aspect of our business," Wandell said.
Full-year 2014 diluted earnings per share increased 18.3 percent to $3.88 compared to diluted EPS of $3.28 in 2013. Net income was $844.6 million on consolidated revenue of $6.23 billion compared to full-year 2013 net income of $734.0 million on consolidated revenue of $5.90 billion.
Dealers worldwide sold 47,149 new Harley-Davidson motorcycles in the fourth quarter of 2014, up 2.8 percent compared to 45,875 motorcycles in the year-ago quarter. In the U.S., dealers sold 26,957 new Harley-Davidson motorcycles in the quarter, down 1.6 percent compared to sales of 27,387 motorcycles in the year-ago period.
Full-year revenue from motorcycles was $4.39 billion compared to $4.07 billion in the year-ago period. Revenue from parts and accessories was $875.0 million compared to $873.1 million in 2013. Revenue from general merchandise was $284.8 million compared to $295.9 million in the prior year. Full-year gross margin for the Motorcycles segment was 36.4 percent, and operating margin was 18.0 percent compared to 35.4 percent and 16.6 percent respectively in 2013.
Operating income from financial services in 2014 was $277.8 million compared to $283.1 million in 2013. Harley say that results for the fourth quarter and full year reflect the impact of higher credit losses.
The Company expects full-year 2015 operating margin of approximately 18 to 19 percent for the Motorcycles segment. The Company expects 2015 capital expenditures for Harley-Davidson, Inc. of between $240 and $260 million.