Harley-Davidson Third-Quarter 2015 Earnings Fall. Stock Plummets In Pre-Market.

Cyril-Huze-Harley-StockThis morning Tuesday October 20 before Wall Street opening , Harley-Davidson Inc. posted a lower quarterly net profit as global new motorcycles sales fell more than 1 percent. Sales in the U.S. fell 2.5 percent. Net income of $140.3 million is down about 6.5% from $150.1 million from a year earlier. Harley-Davidson shares fell more than 8% at 8.15 a.m. ET in pre-market trading as its earnings fell below analysts’ forecasts.

In the wake of an increased competitive environment, the company said it will increase marketing and product development while allocating about $30 million to $35 million in the fourth quarter for “employee separation” and reorganization costs. An early retirement incentive program will be offered to eligible employees in advance of what Harley believes will be a global reduction of around 250 salaried positions across the company, largely completed by the end of the year. Adjustments in positions and structure will be made in essentially every part of the business to achieve the right focus and support the increased demand-generating investments.”

Company Highlights Four Focus Areas for Increased Investment In 2016, Harley-Davidson will increase its investment in customer-facing marketing by approximately 65 percent above 2015 levels. The company also plans to increase its investment in new product development by approximately 35 percent from 2015 levels. These changes represent an approximate $70 million increase in investment to drive demand compared to 2015.

These investments will be focused in four primary areas: • Increasing product and brand awareness • Growing new ridership in the U.S. • Increasing and enhancing brand access • Accelerating the cadence and impact of new products

“In the short term, because the third quarter did not unfold as we expected, we are lowering full-year shipment guidance. Matt Levatich, President and Chief Executive Officer, Harley-Davidson, Inc. said in a statement. The company now expects to ship 265,000 to 270,000 motorcycles to dealers and distributors worldwide in 2015, flat to 2 percent lower than in 2014. The latest projection was revised downward from previous guidance of 276,000 to 281,000.


25 Responses to “Harley-Davidson Third-Quarter 2015 Earnings Fall. Stock Plummets In Pre-Market.”

  1. 1 Jerry Oct 20th, 2015 at 9:02 am

    HD is feeling the competition from Indian, Victory, Triumph, etc…

  2. 2 P. Hamilton Oct 20th, 2015 at 9:03 am

    Harley in trouble. Not surprised at all.

  3. 3 Eddie Oct 20th, 2015 at 9:43 am

    A 140 million dollar quarterly profit. We should all be in such trouble.

  4. 4 Chris Manfield Oct 20th, 2015 at 10:16 am

    Eddie, yep but the problem is that it’s not he 1st quarter that profits are going down.

  5. 5 Mike Greenwald Oct 20th, 2015 at 11:35 am

    Quality and perceived quality are not providing any foundation for ROI.
    OEM loyalty is diminished within the Motor Company and on the street.
    Possibly, it is time to cultivate an atmosphere that encourages the manufacture of a product that is reliable and loyal to the end user.

  6. 6 MDSPHOTO Oct 20th, 2015 at 11:59 am

    Yeah, I don’t think a 65% increase in customer facing marketing spend is the problem. Everyone know’s HD’s offerings and those offerings have not changed much in years, that’s the problem.

  7. 7 Woody's Oct 20th, 2015 at 12:17 pm

    Wish we had the same detailed info on the competition for comparison. At a glance, with increased competition and several recalls that imply the company isn’t able to do basic engineering things they should have mastered decades ago, it doesn’t seem too strange that market share/sales have dropped off. When you set yourself up as the best and most premium product going, and folks buy into it and pay a premium price, they won’t treat you very kindly when their saddlebags fall off and there’s a puddle of coolant under the bike in the morning. I personally know of folks still too angry over their experiences with TC cam followers to ever buy another H-D. That’s the kind of delayed “no sale” that is hard to get back.

  8. 8 Fritz Oct 20th, 2015 at 2:32 pm

    Woody’s and Mike Greenwald pretty much said it all. There are issues with the twin cam that have not been dealt with and these issues are coming back to haunt H-D.

    The boomers will be much more frugal with their motorcycle purchase habits. The economy is headed into the toilet again (as if it ever crawled out) and every last dollar has to go the farthest. All financial decisions will have to made with the skill of a surgeon and haphazardly manufactured product just doesn’t cut it. If it doesn’t work, can’t be improved on, go to something new and work all the bugs out first. And don’t let the bean counters try to squeeze another bunch of dollars out of the R&D finished product.

  9. 9 nicker Oct 20th, 2015 at 3:54 pm

    Was there a lesson to be learned from the AMF years…..???
    Is anyone left at HD that even remembers…. ???

    The degree of manufacturing difficulty is proportional to the complexity of the product.
    Requiring Quality engineering & Quality control…. which have no bean-counter short-cuts.


  10. 10 motorcycle man Oct 20th, 2015 at 4:25 pm

    you guys don’t have much experience with “premium brands” if you think saddlebag latches and coolant leaks are a sign of bad mfg’ing. take a walk through Ducati, MV Agusta, BMW, and KTM forums and see what’s up. water pumps, shaft drives, leg durning heat, shit fueling.
    I’m not a HD guy but you guys crack me up with your lack of knowledge.

  11. 11 mkviz Oct 20th, 2015 at 4:34 pm

    Maybe you should read the article. Because of the disappointing sales they had to cut “JOBS” That’s a bummer for those that lost their jobs

  12. 12 Blackmax Oct 20th, 2015 at 4:44 pm

    Agree with Fritz, that Woody’s and Mike Greenwald pretty much said it all.
    Hit the nail right on the head as far as I’m concerned…
    When a business “model” is broke you either fix it or you lose market share
    Why would i pay between $23,000 – $25, 000 for a Street/Road Glide (Special ?)
    & God forbid I pony up the $30,000 – $45,000 for a CVO
    to turn around & spend $3500 to $10,000 in the aftermarket
    to make the bike run (& sound) like it should ?
    Why aren’t thing things on EVERY Dyna, Softail, Bagger/Tourer in the line-up:
    1. 110 engine in every model. (Bump the CVO up to the 120 that we all know is coming)
    2. 6.5 Boom & upgrade speakers on every Bagger / Tourer
    3. Slim Primary covers
    4. Stronger internals for the TC or gear drive
    5. No more “Specials” make every Street/Road Glide equal
    And the list goes on & on ……..
    Why would anybody pay that kind of $$ & it not be almost perfect / dependable from the showroom
    (except for pipes, fuel controller & a K & N reusable/washable air cleaner)
    I find it very amusing that the CVO’s this year have the remote key fob locking system
    & a tire monitoring system. Things that I’m sure will filter down to the main line soon
    BECAUSE your “competition” already comes with that kind of stuff STOCK !!!!!
    Maybe someday they will figure it out , but until that day, be prepared to lose more market share
    As your competition expands (see Prior article) …..

  13. 13 1550tc Oct 20th, 2015 at 4:59 pm

    Just get fat ole Oprah to start riding and buy a dealership and then watch the stock go up LOL

  14. 14 James just another crazy kiwi Oct 20th, 2015 at 7:13 pm

    Economically the world still is not very stable.
    If your a big company with a dominant share of a market you will most likely suffer the most.
    Growing Companies will not grow as fast but probably still grow until they achieve their share of the pie.
    Then as HD is showing here, hanging onto your slice of the pie becomes allot more difficult.

    All these corporates that out source are looking for greater margins, but if the out sourcing results in poor quality and recall issues the greater profit is reduced by declining sales.
    Then they have no where to go !!

    HD and a number of other automotive companies are in the same barb wire canoe.
    Reputation is all you ever have whether your a company or a person. If you sully it it takes allot of time and effort to repair it.
    Amazing how life in general including business runs in cycles ! I was commenting the other day that I have been in fashion 4 times in my life by just standing my ground lol.

  15. 15 roscoe Oct 20th, 2015 at 8:45 pm

    Any correlation between this article and the one below it?

  16. 16 Magnum Bob Oct 20th, 2015 at 9:28 pm

    So HD sales seem to be slacking? What a shocker……

    Great timing. Here I sit surrounded by transmission and primary guts out of my own 35k mile everyday rider, 6-speed Twin Cam FL. Dealing with things like the compensator for the third time and the second time the trap door bearings are moving around. ‘Just the latest on my lengthy, ever growing list of personal experiences with well known chronic issues that the factory can’t or doesn’t seem to care to fix.

    Seriously, this is the junkiest pile of crap I’ve had since the AMF era.

    True story….’Called my local dealer this very afternoon with around a dozen items for this little project. (What dealer? Hint: we had a rally last weekend. Rhymes with Oktoberfest.) Every single item quoted was priced 60% to nearly 100% OVER Harley’s suggested retail. Luckily I can drive 40 miles to a different dealer who is comparatively giving parts away at full retail. Such a deal…..

    It’s funny to me that a few years back, as reported right here on Cyril’s website, the factory got their panties all in a bunch over dealers selling parts and accessories online too cheap, or god forbid, selling parts at a discount to an independent repair shop….But a dealer who anally rapes every Harley owner who comes through the door with insane levels of price gouging? Well hey…No problem…..I guess that’s all just part of the “Harley Davidson experience”…

    ‘Just not feelin’ the love these days guys…..

    ‘Been making a living dealing with Harleys for about 35 years now and riding them for a bunch more than that. I guess some would call me a loyal customer.

    ‘Next main ride may well not be a Harley.

    Apparently I’m not the only one.

  17. 17 Badams Oct 21st, 2015 at 12:21 am

    Its a Corporation, period.

  18. 18 Highrider Oct 21st, 2015 at 2:00 am

    This problem is not surprising since HD under the last CEO, basically told us ” boomers” to take a hike and , went after the young and diverse market, with ” Black, un ridable motorcycles), Yes their prices are too high, but they did lose sight at a critical time on who has the money to buy expensive motorcycles.

    Are they sunk, definitely not, but better business decisions need to be made, and look at what you are selling, most of the non baggers are not ridable and taking a passenger is pure h*ll on a dyna, sportster or slim Jim etc.

    With Polaris in the neighborhood, Harley stock will get cut more unfortunately, not to say Polaris will benefit, as they have issues as well, which they need to fix, or their bubble pop is coming as well.

  19. 19 rebel Oct 21st, 2015 at 7:50 am

    there isn’t enough room on this page to comment on HD but in the scheme of things they are doing much better than they deserve, have you been to a dealership lately?, it’s ridiculous and I’m on their side !!!!!!

  20. 20 Shanedrive Oct 21st, 2015 at 8:41 am

    Magnum Bob………..yep, I’m an Indy shop. And yep, gouging= A-o.k. but don’t dare sell stocking quantities to an indy, no no, never never uh-uh-uh. Well a dealer would gladly sell but the mother ship sez no or we’ll fine the livin’ buh-jesus out of you.

    Suffice it to say the mother ship will never get rid of me (and other savvy indies) till the day I die.

    I’m watching the Polaris issue, may start servicing them. May not if they start dickin’ w/the their dealers like HD does.

    As for your issues on your 6 speed, yep, seen ’em all. Add to the list: shifting flywheels, auto primary tensioners that get too tight tearing up even more stuff in engine, primary & trans and I’m sure there’s a few that I’m forgetting at the moment.

    However, w/out the mothership, I wouldn’t be in biz. So I do wish ’em long life. 🙂 They keep me busy.

  21. 21 FlaNativ Oct 21st, 2015 at 9:55 am

    I tend to agree with Magnum Bob and the other posters, in my area if you have one of the newer models it’s the dealership or nothing for service. The little guys who used to do service can’t work on the new ones because they can’t afford to buy the equipment needed for servicing the computers etc. on the new models.
    Not that I don’t like my new bike but when it comes to replacing it down the road, I’ll be shopping around.

  22. 22 zipper Oct 21st, 2015 at 10:14 am

    Where is Willie G when they need him? ..Z

  23. 23 Tony Davidson Oct 21st, 2015 at 2:40 pm

    Don’t worry China going to bail them out

  24. 24 Bygtime Oct 21st, 2015 at 8:52 pm

    Tony….that’s funny but could become a reality if stocks and sales keep plummeting… even though they are in the black BRP/Indian, Victory and the rest of the Vee Twin manufacturers sure are taking a serious swipe at the MOCO

  25. 25 Hayden McGuinness Oct 21st, 2015 at 10:12 pm

    I ride an HD everyday for work. I can tell you that spending 8+ hours a day in the saddle has made me despise anything HD produces. From high speed wobbles to 400 degrees of heat rolling off the engine to the bikes just occasionally stalling or puking oil….it’s sad that this is the best they have to offer. To anyone that says they don’t leak anymore or have parts fall off hasn’t spent any real time riding the bike. Putting on your pirate costume and shoehorning your rotund Queen on the back of the bike to stop by the local bar is not riding. I’ve owned over 40 motorcycles in my life and I’ve never had the problems out of any of them that I’ve had with an HD. It’s quite apparent that an R&D department does not exist in Milwaukee. Underpowered bikes that are unstable at speed do not appeal to a younger generation that grew up on bikes that excel at stopping,turning and accelerating. HD is definitely feeling the heat from Victory and Indian. If you doubt that comment just stop by an Indian/Victory dealership and have a look at what brand of bikes they are taking in trade.

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