Harley in talks to raise US$1.3bil to boost cash in midst of collapse

DETROIT: Davidson Inc. is in talks with major US banks to secure US$1.3 billion in funding and expects to tap capital markets for more after sales of its motorcycles declined in every market worldwide, including a 13th consecutive quarterly drop in the United States.

The American manufacturer ended the first quarter with US$1.47 billion in cash and marketable securities, almost double its balance a year ago, after amending and extending credit and loan facilities. But Harley apparently isn’t counting on that amount of liquidity lasting for long after posting an 18% plunge in worldwide retail sales

After starting 2020 off with a 16% drop in first-quarter US retail sales, Harley is in all likelihood headed for its sixth straight year of decline, a dubious streak that began as the American economy was benefiting from confident consumers and a strong labour market.

There are virtually no tailwinds present now to support the company’s comeback efforts

Total motorcycle shipments to dealers fell 10% to 52,973 units in the first-quarter ended March 29, while retail sales at its dealers declined nearly 18% to 40,439 units.

Harley said it would expand its lineup of profitable “iconic” motorcycles, while also targeting to boost sales of some of its new products such as adventure touring, sport bike Streetfighter and electric motorcycles.

“These efforts will pave the way for...improved profitability and long-term growth,” said acting chief executive officer Jochen Zeitz, who took over the helm in February.

Zeitz, who was a board member at Harley and best known for turning around the Puma brand’s near-bankrupt business, replaced CEO Matt Levatich. — With additional reporting by Reuters