(Bloomberg) — Harley-Davidson Inc. shares jumped as much as 13% in premarket trading on better-than-expected profit as Chief Executive Officer Jochen Zeitz’s moves to cut costs and boost margins on a smaller revenue base paid off in the third quarter.The Milwaukee, Wisconsin-based manufacturer reported adjusted earnings per share of $1.05, beating analysts’ consensus 29 cents. In line with Zeitz’s strategy of shrinking supply and shoring up pricing, the company said dealer inventory fell more than 30% compared with a year ago, and it was able to charge asking price for 2020 model year motorcycles in the quarter.Harley shares rose as much as 13% to $32.70 in the premarket Tuesday. The stock has declined 22% this year.Zeitz, the former CEO of sneaker company Puma SE, has narrowed the motorcycle maker’s focus to core markets and model segments and scaled back ambitions for expansion overseas. Motorcycle sales in the U.S., Harley’s biggest market, logged a 15th consecutive quarterly decline — falling 10%. But that was better than the 27% drop in the previous quarter.Harley said it’s exiting 39 markets where weak volumes and profits don’t generate enough cash to support investment. It will focus on 50 key markets, and in 17 of those it will rely on outside distributors to sell bikes. It plans to deliver its motorcycles in India through Hero MotoCorp Ltd. after announcing it is pulling out of the country last month.Motorcycle and related products revenue fell 10% from a year ago to $964 million after Harley postponed its traditional August launch of new products until early 2021. But those sales still surpassed analysts’ consensus for $843.7 million.The restructuring steps have starved dealers of new bikes to shrink inventory and improve pricing. Since taking over as acting CEO in February, Zeitz has announced plans to cut roughly 14% of the workforce, prune its dealer network and delay product launches. He was officially appointed CEO in May.(Adds details on earnings from second paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Tue Oct 27 , 2020