Harley-Davidson Inc. (HDI) reported a record $208.9 million fourth-quarter profit on Thursday, despite a nearly 11 percent downturn in the company's European business.

For the three months ending Dec. 31, the Milwaukee-based heavyweight motorcycle maker earned 71 cents a share, up from $182.4 million, or 60 cents a share, a year ago. That beat the 69-cents-a-share estimate of analysts surveyed by Thomson First Call, but failed to impress investors.

Harley shares slipped $1, or 1.7 percent, to $58.71 on the New York Stock Exchange (search). The stock has traded in a 52-week range of $45.20 to $63.75.

Kevin Tynan, an analyst with Argus Research Corp., said Wall Street was disappointed that the company, which typically outperforms Wall Street's expectations, did not raise its production outlook for the year.

"The fact that they don't raise production, it's almost seen as, well, they're worried about demand," Tynan said.

Chief Financial Officer James Ziemer, who takes over as Harley chief executive officer on April 30, said the company was maintaining its forecast for shipments to rise to 339,000 in 2005 and 400,000 in 2007 despite tough markets overseas.

"We believe this growth rate is prudent, based on the strong U.S. retail demand for motorcycles but tempered by a challenging international marketplace," Ziemer said.

Ziemer said the European market remained challenging.

"That has something to do with the bad economy in Germany and how that affects our high-priced products. I think that we will bear a bigger brunt in Germany than some of the other manufacturers," he said.

Ziemer said the company had cut prices on certain models in all European markets by 2 percent to 9 percent in an attempt to bolster sales, using the cushion provided by a weak dollar.

Revenue in the quarter rose 5.4 percent to $1.22 billion, from $1.16 billion a year ago.

Shipments of motorcycles rose 4.6 percent to 80,587 units, with shipments to U.S. dealers rising 7.8 percent to 68,902. Exports sagged 10.9 percent to 11,685 units.

For the full year, Harley-Davidson's net income rose 16.9 percent to a record $889.8 million, or $3 a share, up from $760.9 million, or $2.50 a share, in 2003. Revenue for the year was $5.02 billion, up 8.5 percent from the previous year.

Shipments for the year rose 9 percent to 317,289 units.