Harley-Davidson Income Climbs As Sales Drop

MILWAUKEE (AP) -- Harley-Davidson reported slumping sales for the third quarter Tuesday though it more than tripled profits thanks to its financial services division and efforts slim down in a bad economy.

The Milwaukee company also predicted that motorcycle shipments for the full year will decline 5 percent to 7 percent from last year and shares fell 4 percent in early trading.

Harley said its net income totaled $88.8 million, or 38 cents per share, in the three months that ended Sept. 26. That compares with income of $26.5 million, or 11 cents per share, in the same period last year.

The company reported a 7.7 percent decrease in retail motorcycle sales worldwide, including a 9.4 percent drop in the U.S. But Harley-Davidson Financial Services recorded third-quarter operating income of $50.9 million, compared with a $31.5 million loss in the year-ago quarter.

"Despite the continued challenges in the economy, we are making solid, steady progress at transforming our business," CEO Keith Wandell said in a statement.

The company, he said, will focus on growth initiatives and continuous improvement.

"We are positioning Harley-Davidson to succeed at today's volumes, as well as to grow and restore greater profitability longer term," his statement said.

Harley has been overhauling itself since the start of 2009 to cope with a shrinking market and economic downturn that has cut demand for its pricey chrome-accented bikes. Sales of Harleys, which range in price from $7,000 to more than $25,000, are closely tied to the health of the economy in the U.S., by far its largest market.

In September, Harley won steep concessions from the its workers and agreed to keep open its two Wisconsin factories, saving about 1,350 jobs. The motorcycle maker had warned that it would move the production to another state if the concessions were rejected.

Harley reported a net profit of 40 cents per share from continuing operations. Revenue fell 2 percent to $1.09 billion.

Analysts surveyed by Thomson Reuters expected 35 cents per share on $1.1 billion in revenue.

The company narrowed its full-year guidance on shipments, raising the low end of its predicted range. Harley now expects to ship 207,000 to 212,000 motorcycles this year. Previous guidance was 201,000 to 212,000.

For the first nine months of the year, Harley reported net income of $193.3 million, or 82 cents per share. That's up from $163.6 million, or 70 cents per share, in the prior year.

Shares of Harley-Davidson Inc. fell $1.32 to$ 32.18.
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