Harley Sales Roar Ahead

Harley-Davidson Inc. said earnings more than doubled in the second quarter as retail sales of its motorcycles rose in the U.S. for the first time since the fourth quarter of 2006.

Despite worries about the U.S. economy, the Milwaukee-based company also raised its full-year forecast of motorcycle shipments to dealers to a range of between 228,000 and 235,000, up 8 percent to 12 percent from last year. Three months ago, Harley expected a rise of as much as about 8 percent, reported The Wall Street Journal.

"We remain cautious about the economy," Keith Wandell, chief executive officer, said in an interview. "We think the consumer is skittish," he said, partly because of the wrangling in Washington over the federal budget.

But he said demand for new motorcycles has improved recently in the U.S., partly because prices for used bikes have risen, making them less tempting. Used-motorcycle prices sagged during the recession as people who lost jobs were forced to sell their motorcycles or lost them to repossessions. Harley also may have gotten a small lift in the latest quarter from disruptions in motorcycle imports from Japan, caused by the earthquake there in March.

Unit retail sales of new Harley motorcycles in the U.S. were up 7.5 percent from a year earlier during the quarter. Outside the U.S., retail sales were up 2.4 percent. International growth was held back somewhat by a sales decline in Brazil, which the company blamed on a transition to a new dealer network there.

Harley said prices will rise by an average of 1 percent on its 2012 model bikes, being introduced this month. That will be the first price increase since 2007 and will fall short of cost gains for steel and other raw materials.

Harley expects to benefit from increased manufacturing efficiency. At its giant York, Pa., plant, for instance, production is moving into a single facility from more than 20 separate buildings to improve work flow. Some tasks, such as metal stamping and grinding of metal parts, have been outsourced. New labor agreements allow Harley to use more temporary workers.

The company expects the overall savings from its restructuring efforts to total $210 million to $230 million this year.

Harley's income in the latest quarter was $190.6 million, or 81 cents a share, up from $71.2 million, or 30 cents a share, a year earlier. Sales of motorcycles and related products increased 18 percent to $1.34 billion. Revenue from financial services, including the financing of motorcycle sales, slipped 4.5 percent to $165.9 million.