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Harley drops Buell line, income plummets
By Rick Barrett of the Journal Sentinel
Updated: Oct. 15, 2009 8:06 a.m.
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Michael Sears
Todd Raysby works in the Buell factory in East Troy building a Buell Ulysses model.
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Michael Sears
Todd Raysby works in the Buell factory in East Troy building a Buell Ulysses model.
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Harley-Davidson stock tracker (HOG)
Harley-Davidson Inc. said Thursday it will discontinue its Buell motorcycle brand and divest its recently acquired MV Agusta lineup as part of the company's long-term business strategy.
The news that Harley was dropping two lineups came as the struggling manufacturer also said that its third-quarter income fell 84% to $26.5 million, or 11 cents a share, from $166.5 million, or 71 cents a share a year ago.
The company had $1.12 billion in sales in the quarter, down 21% from $1.42 billion in the third quarter of 2008. Worldwide motorcycle sales at Harley dealers fell 21% during the third quarter compared with the same period in 2008. The company said it shipped 27% fewer motorcycles in the quarter.
In a news release, Harley said it would discontinue its Buell brand, based in East Troy, and divest the Italian MV Agusta brand. The Buell decision will result in the loss of about 80 manufacturing jobs in East Troy and about 100 salaried positions.
"The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful long-term growth," CEO Keith Wandell said in the release.
Harley, the world's largest manufacturer of heavyweight motorcycles, has been restructuring as it has sought to cope with weaker sales. The company has cut more than 1,000 jobs, implemented temporary production shutdowns, and is considering closing its assembly plant in York, Pa.
Even many die-hard Harley loyalists, caught by the severity of the economic downturn, haven't bought new bikes.
In July, the company trimmed its shipment forecast for this year to 212,000 to 228,000 bikes, as much as 30% fewer than in 2008. On Wednesday, Harley shares climbed to one of their highest levels in a year after Wells Fargo & Co. upgraded the stock, citing a possible increase in motorcycle shipments to dealers. A drop in motorcycle inventory this year should mean a "low single-digits" rise in shipments in 2010 and 2011, Tim Conder, an analyst at Wells Fargo Securities, wrote in a note to investors.
Conder changed the share rating to "outperform" from "market perform." "Investors are yet to fully appreciate" the potential shipment increase, benefits from cost cutting, profit from Harley's financial-services division and a possible resumption of share repurchases, Conder wrote.
By Rick Barrett of the Journal Sentinel
Updated: Oct. 15, 2009 8:06 a.m.
enlarge photo
Michael Sears
Todd Raysby works in the Buell factory in East Troy building a Buell Ulysses model.
more photos
Michael Sears
Todd Raysby works in the Buell factory in East Troy building a Buell Ulysses model.
Close On Wall Street
Harley-Davidson stock tracker (HOG)
Harley-Davidson Inc. said Thursday it will discontinue its Buell motorcycle brand and divest its recently acquired MV Agusta lineup as part of the company's long-term business strategy.
The news that Harley was dropping two lineups came as the struggling manufacturer also said that its third-quarter income fell 84% to $26.5 million, or 11 cents a share, from $166.5 million, or 71 cents a share a year ago.
The company had $1.12 billion in sales in the quarter, down 21% from $1.42 billion in the third quarter of 2008. Worldwide motorcycle sales at Harley dealers fell 21% during the third quarter compared with the same period in 2008. The company said it shipped 27% fewer motorcycles in the quarter.
In a news release, Harley said it would discontinue its Buell brand, based in East Troy, and divest the Italian MV Agusta brand. The Buell decision will result in the loss of about 80 manufacturing jobs in East Troy and about 100 salaried positions.
"The fact is we must focus both our effort and our investment on the Harley-Davidson brand, as we believe this provides an optimal path to sustained, meaningful long-term growth," CEO Keith Wandell said in the release.
Harley, the world's largest manufacturer of heavyweight motorcycles, has been restructuring as it has sought to cope with weaker sales. The company has cut more than 1,000 jobs, implemented temporary production shutdowns, and is considering closing its assembly plant in York, Pa.
Even many die-hard Harley loyalists, caught by the severity of the economic downturn, haven't bought new bikes.
In July, the company trimmed its shipment forecast for this year to 212,000 to 228,000 bikes, as much as 30% fewer than in 2008. On Wednesday, Harley shares climbed to one of their highest levels in a year after Wells Fargo & Co. upgraded the stock, citing a possible increase in motorcycle shipments to dealers. A drop in motorcycle inventory this year should mean a "low single-digits" rise in shipments in 2010 and 2011, Tim Conder, an analyst at Wells Fargo Securities, wrote in a note to investors.
Conder changed the share rating to "outperform" from "market perform." "Investors are yet to fully appreciate" the potential shipment increase, benefits from cost cutting, profit from Harley's financial-services division and a possible resumption of share repurchases, Conder wrote.
