What To Expect From Harley-Davidson’s Second-Quarter Results?

by Trefis Team
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Harley-Davidson (NYSE: HOG) will release its second-quarter results and conduct a conference call with analysts on 24th July 2018. Consensus market estimates expect the company to post an EPS (Non-GAAP) of $1.34 and revenue of $1.41 billion, 9.5% and 10.8% lower than the reported figures a year ago. The company is expected to continue and face headwinds in its U.S. market which are likely to negatively impact the company’s revenues and profitability in the second quarter.

Harley-Davidson reported a total motorcycle shipment volume of 63,944 in its first quarter, lower by almost 10% y-o-y, and the company expected to sell between 67,500 to 72,500 motorcycles in the second quarter. This figure is approximately 14% lower than the reported shipments in Q2 2017 (assuming mid-points). The declining sales volume depicts the continued weakness in the U.S. market for the company’s product offering as a result of its aging population. The company continues to remain focused on enhancing its reach in its international market, with a plan to increase their international sales volume to 50% of the total sales compared to a current exposure of about 43%. However international retail shipments increased minimally by 0.2% in Q1 and are likely to remain weak in the near term.

Additionally, the company’s bottom line is expected to remain weak as a consequence of an inflationary environment of raw material prices, with further cost headwinds of about $15 million to $20 million expected as a result of the recently imposed metal tariffs in the U.S.

Furthermore, Harley-Davidson has been under constant speculation as a result of the ongoing global trade-war. The company recently announced its decision to move a portion of their production facilities overseas, from the U.S., to avoid the recently imposed European Union (EU) trade tariffs. The anticipated tariffs are expected to increase the company’s average cost of its motorcycle sold in the EU by about $2,200 per motorcycle. The EU has been an important market for Harley, accounting for more than 16% of the company’s sales in 2017, thus shifting their production base would enable the company to maintain their regional competitiveness. The company is expected to provide further information about their latest decision in their upcoming earnings release and we look forward to hearing more about the same.

Our key expectations from the company’s full-year 2018 results are highlighted in our interactive dashboard analysis. You can make changes to our assumptions to arrive at your own fair price estimate for the company.


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