MILWAUKEE — Harley-Davidson Inc. cut its fourth-quarter loss, getting a ride from a restructuring and a strong performance from its financial services unit even as motorcycle sales slumped.
Harley’s stock surged $3.45 per share, or 9.45 per cent, in midday trading after company executives appeared to be more upbeat about the company’s performance this year.
The Milwaukee company on Tuesday reported a net loss of $46.8 million, or 20 cents per share, a vast improvement over the $218.7 million, or 94 cents per share, that it lost in the same period a year ago.
The company would have made money for the quarter without an $85 million charge from buying back senior notes.
Harley said it lost $42.1 million, or 18 cents per share, from continuing operations. Harley-Davidson Financial Services contributed $43.5 million in operating income.
Revenue for the quarter rose nearly 20 per cent to $917 million, though motorcycle sales for the quarter were down 1 per cent worldwide and 0.2 per cent in the U.S.
Still, the performance beat Wall Street estimates. Analysts polled by FactSet expected a loss of 24 cents per share on revenue of $853.8 million.
And the company reversed its 2009 full-year loss, posting a profit of $146.5 million, to 62 cents per share. Harley lost $55.1 million, or 24 cents per share, in 2009.
Harley CEO Keith Wandell said in a statement that the company feels good about its full-year results. “We have made strong progress at transforming our business to be leaner, more agile and even more effective at delivering great products and customer experiences,” he said.
Company executives would not estimate sales for the coming year, but on a conference call with industry analysts they seemed optimistic because they plan to increase shipments.
A key factor could be whether Harley’s main demographic will let their hair down a bit more in 2011. The company’s U.S. sales fell slightly last year even as consumers returned to car and truck dealers, helping auto sales rebound 11 per cent over 2009.
With unemployment at 9.4 per cent in December nationwide, Harley has been hurt by a lack of consumer confidence in its prime buying age group of people 20 to 40 years old, said Bill Selesky, senior analyst for Argus Research in New York.
“I think they worry about the economy. They’ve kind of pulled in the reins” on spending, he said. Cars and trucks, he said, have made a comeback because they appeal to a larger part of the population.
Loans also were hard for the 20-to-40 age group to get last year due to tighter credit requirements, and that contributed to the motorcycle slump, Selesky said.
But he predicts a better year in 2011 for Harley-Davidson as credit requirements loosen and the economy gradually gets better. “I think consumers in general and the motorcycle-buying public feels a little bit better about the economy even though the unemployment rate is still high,” he said.
The consumer confidence index rose in January to its highest level in eight months. The Conference Board said Tuesday its index climbed to 60.6 this month, up from 53.3 in December. While that reading was better than economists had expected, confidence is still far from the 90 level that signals a healthy consumer mindset.
During the quarter, the company shipped 44,481 Harley-Davidson motorcycles to dealers worldwide, up 24 per cent from the year-ago quarter as Harley started to replenish dealer inventories.
For the full year, global motorcycle sales dropped 8.5 per cent compared with 2009, with the company selling 222,110 Harley-Davidsons. The company shipped 210,494 cycles, 5.6 per cent fewer than the previous year.
Harley said it expects to ship 221,000 to 228,000 motorcycles this year, an increase of 5 to 8 per cent as it continues to refill its dealerships.
Harley-Davidson also said it will begin talks this week on a new labour agreement at its Kansas City, Mo., factory operations, even though the contract doesn’t expire until July of 2012. Harley said it has told unions that Kansas City has to become more competitive and flexible “if those operations are to remain viable.”