Harley Davidson Shares Tumble on Margin and Sales Concerns, Despite Solid Q3 Results

October 19 00:00 2011

New York, October 19 (RainbowNewsLine.com) – Harley Davidson (NYSE: HOG) is having a tough time in achieving more efficient manufacturing. There have been frequent disruptions in production at the company’s York, Pa., plant that led to reduced sales of some of its larger and higher-margin motorcycles. The lower-margin products like the smaller Sportsers made at its plant in Kansas City took up some of the slack.

There were frequent stoppages at the York plant as the company is trying to implement a more efficient process in which a single production line will handle different products that used to be produced in different assembly lines. However the transition has been rocky.
The Milwaukee-based motorcycle manufacturer’s shares tumbled Tuesday over investors’ worries regarding disappointing profit margins and sales although it posted a solid financial performance for the third quarter in which its net income more than doubled. In mid-afternoon trading Tuesday, Harley’s shares tumbled 8.2%, or $3.04, to $34.17.

Harley’s net income in the latest quarter ended September 25 was $183.6 million, or 78 cents a share, up from $88.8 million, or 38 cents a share, a year earlier against analysts’ earnings estimates of 76 cents a share. Gross profits were 33.7% of revenues in the latest quarter, down from 34.9% a year earlier. Some analysts had expected a margin of 37%.