CHICAGO – Harley-Davidson Inc. (HDI) Wednesday said quarterly earnings rose a better-than-expected 22 percent, driven by strong sales of its entry-level Sportster model.
The stock rose 5 percent on the New York Stock Exchange (search).
The company, best known for its chrome-plated touring bikes, said total sales in its U.S. dealer network climbed 18.8 percent during the quarter, boosted by demand for the redesigned Sportster.
The Sportster (search), at prices starting at about $6,500, is the company's lower-end motorcycle designed to attract younger riders. New 2005 models were shipped to dealers two weeks early this year to meet strong demand.
"The retail numbers were up over 18 percent. This is even better than we were originally expecting," said Carole Buyers, analyst with RBC Capital Markets, who rates the stock "outperform."
Milwaukee-based Harley-Davidson said second-quarter net income rose to $247.2 million, or 83 cents a share, from $202.2 million, or 66 cents a share, a year earlier.
Analysts, on average, expected earnings of 75 cents a share, within a range of 74 cents to 79 cents, according to Reuters Estimates.
"What drove the earnings upside was stronger-than-expected gross margins" aided by greater operating efficiencies at its plants, said Timothy Conder, an analyst with A.G. Edwards, who rated the stock "buy."
Harley-Davidson said revenue increased to $1.33 billion from $1.22 billion.
The company left unchanged its 2004 production target of 317,000 motorcycles, up 8.9 percent from the year before, after signaling in January that future shipments would increase at a slower pace than the double-digit rates of recent years.
In January, the company said its long-range goal is to produce 400,000 Harley-Davidson motorcycles in 2007 and achieve annual earnings growth at a mid-teens percentage rate.
The company said second-quarter revenue from Harley-Davidson motorcycles was $1.02 billion, up 6.8 percent. It shipped 82,034 Harley-Davidson motorcycles in the quarter, an increase of 7.9 percent over the year before.
Parts and accessories revenue rose 12.7 percent to $230.1 million. Revenue from general merchandise, such as apparel and collectibles, was $53.1 million, up 21.5 percent.
At Harley-Davidson Financial Services, its financing arm, operating income rose 10.2 percent to $49.0 million.
Shares of Harley-Davidson rose $3.10 to $62.70 Wednesday, just shy of the $62.88 all-time high.
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