Shares of Harley-Davidson (HOG) are under pressure after the motorcycle company posted profit for the first quarter ahead of expectations, but reported continuing declines in sales as it backed a cautious outlook for 2019. Appearing to reverse course on Harley-Davidson on Tuesday, President Donald Trump pledged to retaliate against EU tariffs hurting the company.
RESULTS: On Tuesday, Harley-Davidson reported first quarter earnings per share ex-items of 98c and revenue $1.2B, with consensus at 65c and $1.2B, respectively. The company said revenue from the Motorcycles segment was down in first quarter behind lower shipments. Operating income decreased due to lower revenues, unfavorable product mix and increased tariffs, partially offset by lower selling and administrative costs and restructuring charges. Harley-Davidson worldwide retail sales decreased 3.8% in the quarter, while international retail sales were down 3.3%, according to the company. Harley noted that U.S. retail sales were down 4.2% in the first quarter driven by continued weak industry sales, which were down 4.7%. First quarter worldwide retail sales were impacted by the limited availability of Street motorcycles due to the recall announced in January. Harley-Davidson also backed its second quarter shipment view of 65,500-70,500 motorcycles, and 2019 shipment view of 217,000-222,000 motorcycles. CEO Matt Levatich added that China tariffs do not impact the company as much as the EU tariffs do. "The big impact for us is the European Union tariffs. And nothing has changed since the European Union increased the import tariff from 6% to 31% last June," Levatich said during the company's earnings call.
TRUMP VOWS TO 'RECIPROCATE': Earlier on Tuesday, President Trump said in tweet that, "Harley Davidson has struggled with Tariffs with the EU, currently paying 31%. They've had to move production overseas to try and offset some of that Tariff that they've been hit with which will rise to 66% in June of 2021." @MariaBartiromo So unfair to U.S. We will Reciprocate!" Last year, the President had called for a boycott against Harley-Davidson amid a spat over steel, when the motorcycle company announced plans to move production to overseas facilities from the U.S. to avoid EU tariffs imposed in retaliation against Trump’s duties on aluminum and steel imports.
PRICE ACTION: In afternoon trading, shares of Harley-Davidson have dropped about 1% to $39.45.
"Trump Effect" is The Fly's recurring series of exclusive stories that highlight stocks that are being impacted, or are predicted to be impacted, by the comments, actions and policies of President Trump and his administration.
