Here’s What We Are Watching For In Harley-Davidson’s Q4 2017 Earnings
Harley-Davidson (NYSE:HOG) will announce its Q4 2017 results on January 30th 2018 and while the company has been facing a tough industry environment for the past two years, it is focusing on several measures to engineer a “turnaround.” We will be keenly looking for the impact of these initiatives and other future measures likely to be announced by the company along with these earnings.
Below is a summary of the company’s performance in the last two quarters and consensus expectations for Q4 2017.
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Key Trends:
Weak industry environment to continue: The motorcycle industry is likely to remain weak in 2018. According to RBC the motorcycle industry will shrink by 5-7% in 2018 and this softness is likely to impact Harley-Davidson. Nearly 65% of Harley-Davidson’s motorcycle shipments are in the U.S. and hence the company is significantly impacted by the weakness in this region. While the company is focusing on several international markets to drive growth, these regions are not likely to contribute materially towards its revenues in the next few years. (Read How Important Are International Markets To Harley-Davidson’s Valuation?)
Initiatives To Attract New Riders : With Harley-Davidson’s loyal customer base aging, the company is taking several steps to attract new riders and drive growth for its motorcycles. Harley-Davidson is conducting a medalled event at the X Games called the “Snow Hill Climb” where riders will race modified twin cylinder motorcycles. This event is aimed at attracting young customers to “recreational” bikes to drive demand for its motorcycles. The company is also looking at attracting women to ride motorcycles through training programs via its Riding academy. However, in view of a weak industry environment we do not expect these measures to drive significant growth for the company.
With falling shipments and declining revenues we will be carefully looking out for Harley-Davidson’s guidance for 2018 in its Q4 2017 earnings call.
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