Harley-Davidson's net income more than tripled during the first quarter, yet the U.S. economy still weighed on sales at home and will continue to do so as the company retools its manufacturing operations.
Harley posted a net profit of $119.3 million for the quarter Tuesday, up from $33.3 million a year ago. But the 51-cent-per-share earnings fell short of analyst expectations for 55 cents. Harley earned 14 cents a share in the first quarter last year.
The company reduced the low end of its estimate for motorcycle shipments this year, as a precaution, because of possible supply interruptions due to the March 11 earthquake in Japan.
Profits, the company said, were driven by the financial services division, which saw operating earnings rise more than 150 percent.
Global sales also rose 3.5 percent, helping to offset a weak performance in the U.S., where sales fell 0.5 percent from the first quarter of last year.
The company reported motorcycle sales revenue of $1.06 billion, compared with $1.04 billion in 2010. That just edged out the expectations of most analysts.
CEO Keith Wandell said Harley was pleased by growth worldwide "even as we continue to encounter some headwinds in the U.S. related to the challenging macroeconomic conditions."
Earnings were also hit by restructuring efforts at the company's manufacturing operations in York, Pa. That will continue to affect Harley's finances until it is completed, Wandell said.
"When this manufacturing transition is completed next year, we will have a best-in-class, flexible, lean operating structure that we expect will yield substantial ongoing savings," he said.
Two years ago, Harley and its union agreed to a seven-year contract at its main motorcycle assembly plant in York that cut staffing sharply.
Operating income from financial services rose to almost $68 million for the quarter, compared with $26.7 million in the year-ago period, due mainly to continued improvement in credit performance.
Harley said its suppliers get a limited number of parts, including electronics, from companies in Japan. In particular, a part in radios could affect shipment volume, but the company believes it has viable options for the radios and other parts, it said.
The company expects to ship 215,000 to 228,000 cycles worldwide this year, compared with previous guidance of 221,000 to 228,000.
"We continue to assess our supply chains, and as a precaution, we have decided to modestly reduce the lower end of our shipment guidance following the events in Japan," Wandell said.
Shares in Harley-Davidson Inc. fell 81 cents, or 2 percent, to $38.90 in premarket trading.
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