Harley-Davidson's third quarter 2019 results have been released, and the headline news is that Harley's retail motorcycle sales may be starting to show some signs of recovery - or at least a slowing of the deterioration.
It was thought that a decent March might have suggested such a rally, but the Q2 numbers didn't continue the trend seen towards the end of Q1. However, for the three months to the end of September 2019, Harley unit sales may, just may, finally be headed in a better direction.
Domestic US retail motorcycle sales were down by -3.60% in Q3 at 34,903 units in a 601 cc+ market that Harley says was down by -1.7%, with domestic US retail sales down by -5.60% for the nine months at 105,756 units. In Europe (EMEA) sales were -6.0% for the quarter (10,483 units) and -6.0% for the nine-month period (36,899 units).
There was strong Q3 growth in Asia Pacific (+8.7%/8,078 units) and Canada (+4.4%/2,560 units). Latin America was -3.10%/2,498 units, meaning that total international sales were +2.70% for Q3 at 23,619 units, which has improved 2019 YTD international sales to a decline of -3.90% (73,763 units). This has taken Harley's worldwide total sales to 58,522 units (-1.2%) for Q3 and 179,519 units (-4.90%) for the YTD.
Harley-Davidson's third quarter U.S. market share was 49.8 percent; their year-to-date European market share was 8.9 percent through September.
Revenue from the Motorcycles and Related Products (Motorcycles) segment was down in the third quarter behind lower shipments. Operating income decreased primarily due to lower revenues and increased tariff costs, partially offset by savings realized from the company's manufacturing optimization initiative.
For the full year 2019, the company says it continues to expect motorcycle shipments to be approximately 212,000 to 217,000, with some 38,500 to 43,500 to ship in Q4.
Motorcycles segment operating margin as a percent of revenue is expected to be approximately six to seven percent, with Financial Services segment operating income expected to be down year-over-year.
During the quarter, the company says it "delivered earnings per share and Motorcycles segment operating margin ahead of expectations. The company was encouraged by global retail sales results driven by its actions and a tempered U.S. industry rate of decline.
"We are driving stability in our business and bringing data insights and intensified consumer focus to guide our efforts to build committed riders and meet our near and long-term objectives," said Matt Levatich, President and Chief Executive Officer of Harley-Davidson. "We'll continue to fuel all
aspects of the riding experience and add new solutions to fully develop, engage and retain riders through their journey, starting with the very first spark of interest," said Levatich.
The company says it also "advanced its brand amplification efforts and developed capabilities to invigorate the Harley-Davidson experience and build committed riders.
"During the quarter, Harley-Davidson sharpened its U.S. and international objectives through 2027 to better align with its expanded efforts to build committed riders.