Harley-Davidson warns of tariff pressures on profitability
Harley-Davidson warned its operating margin will drop as low as 9 percent because of the impact of new tariffs.
The motorcycle maker said its operating margin, a profitability measure closely watched by investors, will range between 9 to 10 percent this year, down from a forecast of 9.5 percent to 10.5 percent. Revenue in the most recent quarter from motorcycles and related products dropped to $1.53 billion, from $1.58 billion, as sales in the U.S., Asia Pacific region and Canada declined.
Harley found itself in the crosshairs of President Donald Trump's trade policies in June, when it announced a plan to shift some motorcycle production to factories outside the U.S. because of retaliatory tariffs from the EU. Those EU tariffs were sparked by Mr. Trump's decision to slap tariffs on European steel and aluminum. Harley-Davison estimated the new tariffs are adding about $2,200 in costs per motorcycle exported from the U.S. to the EU.
Mr. Trump criticized Harley-Davidson's decision, claiming Harley customers "are not happy with their move."
Even though Harley-Davidson reported second-quarter results that topped Wall Street expectations on steady sales in Latin America, Europe, Middle East and Africa, shipments slipped by 11 percent.
For the three months ended July 1, Harley-Davidson Inc. earned $242.3 million, or $1.45 per share. A year earlier the Milwaukee company earned $258.9 million, or $1.48 per share.
Stripping out manufacturing optimization costs, earnings were $1.52 per share. That easily beat the $1.35 per share that analysts surveyed by Zacks Investment Research were calling for.
Sales in Latin America rose 9.1 percent and sales in the EMEA region increased 3.6 percent. Overall revenue topped the $1.42 billion that analysts predicted.
