CHICAGO: Harley-Davidson Inc reported on Tuesday a sharp jump in revenue and an unexpected profit for the fourth quarter, boosted by price hikes and a shift toward sales of higher-margin touring and cruiser motorcycles.
In the midst of nearly a two-year sales drop, Harley reset its strategy in 2020 to focus on selling its high-margin Touring, large Cruiser and Trike bikes to older and wealthier customers in markets such as the United States and Europe.
The Milwaukee, Wisconsin-based company's earnings beat can be partially attributed to higher pricing and surcharges that have helped buoy its bike sales amid surging raw materials prices and volatile supply chains.
Harley's overall growth outlook assumes that supply chain woes will start to ease heading into the second half of this year.
"We expect revenue to be positively impacted by our global pricing actions as we work to offset the cost headwinds across the supply chain, Harley chief financial officer Gina Goetter told analysts on a conference call.
Price inflation and surcharges have been limited to the United States, but company executives said stronger pricing dynamics will be rolled out to global markets in the new fiscal year.
"While the demand is there, the supply isn’t, so it seems like the consumer will bear the burden of covering it, said Jaime Katz, senior analyst at Morningstar.
Harley reported revenue from motorcycle and related products of US$816 million, compared to analysts' estimates of US$663.8 million and US$531 million in the year-earlier period. Total revenue was US$1.02 billion, up from US$725 million.
Retail sales in the United States, the company's biggest market, rose to 18,855 units from 17,274 units.
Net income jumped to US$21.6 million, or 14 cents per share, in the fourth quarter, compared with a loss of US$96.4 million, or 63 cents per share, a year earlier.
Analysts on average had expected a loss of 38 cents per share in the most recent quarter, according to Refinitiv.
Harley's shares were up 14.5% to US$41.36 on the New York Stock Exchange.
The company continues to cater to its wealthier customer base. Its model mix, including the large Cruiser, Trike bikes, and sold-out units of its Pan America model, has been crucial to maintaining solid US and European sales. The Pan America 1250 special has a starting price tag of US$19,999.
North American retail sales were up 8% in the fourth quarter compared with last year, driven in part by 23% growth in sales of adventure touring models as well as solid sales of Harley's Pan America and Sportster S bikes.
"From the outset, we saw the potential in the adventure touring category – as of today, it is the second-fastest growing category in North America, Harley chief executive officer Jochen Zeitz said on the call.
Harley's full-year revenue for motorcycle and related products was US$4.5 billion, up 39% from US$3.3 billion in 2020. Total revenue for 2021 was US$5.3 billion, up 32% from US$4.1 billion in the previous year.
