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SEC Probes Harley-Davidson; Profit Dips

Associated Press
Published | Updated

MILWAUKEE – Motorcycle maker Harley-Davidson Inc. (HDI) on Wednesday said its second-quarter earnings declined 4 percent from last year, as lower motorcycle shipments outweighed a modest rise in revenue. However, the company's results beat Wall Street expectations, and Harley-Davidson also raised its full-year earnings growth target.

Separately, the company reported that the Securities and Exchange Commission (search) is launching an inquiry into the company's April announcement that it would limit short-term production and decrease planned motorcycle shipments. Regulators also are looking into related shareholder complaints, and the Milwaukee-based company said it is cooperating with the SEC.

Shares climbed $2.74, or 5.5 percent, to $52.44 in premarket activity.

For the quarter ended June 26, net income fell to $237.4 million, or 84 cents per share, from $247.2 million, or 83 cents per share, a year ago. Revenue edged up 0.4 percent to $1.333 billion from $1.328 billion last year.

The company's results beat Wall Street's consensus view by a wide margin. Analysts surveyed by Thomson Financial (search) were looking for profit of 79 cents per share on revenue of $1.31 billion.

Second-quarter motorcycle shipments fell 6 percent to 77,128 units, while revenue from the flagship Harley-Davidson motorcycle business slipped 1.4 percent to slightly more than $1 billion.

This year, the company said it is on track to ship 329,000 Harley-Davidson motorcycles, in line with its lowered target, yielding a shipment growth rate of 3.7 percent.

Harley-Davidson (search) also forecast 2005 earnings per share growth of 10 percent to 13 percent, up from its prior forecast of 5 percent to 8 percent, due to an increase in share buybacks during the quarter. The company bought back 17.7 million of its own shares during the period, sharply higher than the 2.9 million shares it bought back in the first quarter.

The company also backed its goal for longer-term earnings per share growth in the mid-teens range and annual growth in motorcycle shipments between 7 percent to 9 percent.