With lackluster financial results looming, Harley-Davidson has announced plans to discontinue the Buell motorcycle line and is actively seeking buyers for the recently acquired MV Agusta unit.
The Milwaukee manufacturer revealed the news in its third quarter 2009 financial statement on Oct. 15. The Motor company stated decreased revenue and net income compared to the same period a year ago.
More telling however, is the announcement that worldwide retail sales for the same period dropped 21.3% compared to 2008. That is an improvement from the 30.1% decline in 2009's second quarter, however, and Harley brass intends to narrow its focus of efforts on the Harley-Davidson brand.
"While the environment remains challenging for us, we are mildly encouraged by the moderation in the decline of ...Harley-Davidson motorcycle sales," says Keith Wandell, chief executive officer of Harley-Davidson, Inc. "Moving forward, our strategy is designed to strengthen Harley-Davidson for long-term growth..."
Remaining inventories of Buell motorcycles and accessories will continue to be sold at authorized dealers, and warranties will still be honored, though employment for a majority of Buell employees will end on December 18th, 2009. Harley expects a "reduction" of well over 150 jobs - both salaried and hourly - over time.
A video statement by Erik Buell, founder, chairman and chief technical officer can be seen on the company's website, www.buell.com
Meanwhile, parent Harley-Davidson is putting Italy-based MV Agusta out on the open market. Harley acquired MV Agusta just over a year ago, in 2008.
"We are refocusing our business with the expectation that we can provide growth that is both profitable and sustainable over the long term," said Wandell. "We believe we can create a bright long-term future for our stakeholders through a single-minded focus on the Harley-Davidson brand."
The company's official statement follows.
Harley-Davidson announces 3rd quarter results, Unveils long-term business strategy
MILWAUKEE (October 15, 2009) - Harley-Davidson, Inc. (NYSE:HOG) announced decreased revenue, net income and earnings per share for the third quarter of 2009 compared to the year-ago period, while reporting a moderation in the decline of retail new Harley-Davidson motorcycle sales compared to the second quarter.
Worldwide retail sales of new Harley-Davidson(r) motorcycles declined 21.3 percent in the third quarter compared to last year's third quarter, an improvement from the 30.1 percent decline in this year's second quarter. An 84.1 percent decline in net income and an 84.5 percent decline in diluted earnings per share from the year-ago quarter reflected lower motorcycle shipments and the effects of the economy on retail and wholesale loan performance at Harley-Davidson Financial Services.
Harley-Davidson also unveiled major elements of its go-forward business strategy to drive growth through a single-minded focus of efforts and resources on the unique strengths of the Harley-Davidson brand, and to enhance productivity and profitability through continuous improvement. As approved yesterday by Harley-Davidson's Board of Directors, the Company will discontinue its Buell product line and divest its MV Agusta unit as part of this strategy.
"While the environment remains challenging for us, we are mildly encouraged by the moderation in the decline of dealer retail Harley-Davidson motorcycle sales," said Keith Wandell, Chief Executive Officer of Harley-Davidson, Inc. "And moving forward, our strategy is designed to strengthen Harley-Davidson for long-term growth and deliver results through increased focus.
"As our announcement regarding Buell and MV Agusta indicates, we are moving with the speed and decisiveness required to bring our business strategy to life," said Wandell. "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."
Third Quarter and Nine-Month Results
Net income for the third quarter was $26.5 million, compared to $166.5 million in the third quarter of 2008, on revenue of $1.12 billion, compared to $1.42 billion in the year-ago period. Diluted earnings per share were $0.11 for the third quarter of 2009 and $0.71 in the year-ago period.
Through nine months, Harley-Davidson, Inc. reported net income of $163.6 million, down 71.6 percent and diluted earnings per share of $0.70, down 71.4 percent from the year-ago period. Revenue through nine months was $3.57 billion, down 17.1 percent from the same period last year.
"Delivering Results Through Focus" Strategy
A key element of the Company's go-forward strategy is to focus on extending the Harley-Davidson brand by leveraging unique Harley-Davidson strengths. The strategy focuses company resources on Harley-Davidson products and experiences, global expansion, demographic outreach and commitment to core customers. In addition, the Company will continue to expand its initiatives to enhance profitability through continuous improvement in manufacturing, product development and business operations.
"We are refocusing our business with the expectation that we can provide growth that is both profitable and sustainable over the long term," said Wandell. "We believe we can create a bright long-term future for our stakeholders through a single-minded focus on the Harley-Davidson brand."
The Company said it would share additional details about the strategy during its investor conference call today.