Source AP ©

Harley-Davidson profit down 18 percent

Harley-Davidson Inc. said Thursday that a three-week strike at the motorcycle maker's largest manufacturing plant decreased its first-quarter earns by 18 percent.

Net income for the quarter ended April 1 totaled $192.3 million (EUR141.6 million), or 74 cents per share, compared with a profit of $234.6 million, or 86 cents per share, a year ago. Revenue dropped 8.3 percent to $1.18 billion (EUR870 million) from $1.29 billion last year.

The earnings decline still beat Wall Street projections. Analysts had expected a profit of 70 cents per share on revenue of nearly $1.1 billion (EUR810 million), according to a poll by Thomson Financial.

Worldwide retail sales of Harley-Davidson motorcycles dropped 1.3 percent. Shipments were down 14.8 percent to 67,761 units. Domestically, sales were down 5.9 percent - below the overall heavyweight motorcycle market's decline of 0.7 percent for the quarter. Overseas, Harley's sales were up 16.5 percent.

Jim Ziemer, chief executive officer of the Milwaukee-based company, said sales during the first quarter, which is colder and less rider-friendly, are typically lower and do not indicate sales for the year.

Harley said in February that the strike at its plant in York, Pennsylvania, would result in a loss of one month's production, making it about 14,000 bikes short for the year. The strike closed the plant there and slowed others in Wisconsin, where parts are made. It also forced many suppliers to temporarily lay off their workers. Harley also lowered its first quarter motorcycle shipments for the year to between 64,000 and 66,000, down from the 82,000 and 84,000 it expected to ship before the strike.

The strike also caused Harley to lower its earnings expectations for the year, expecting moderate revenue growth, lower margins and earnings per share growth ranging from 4 percent to 6 percent. On Thursday, Ziemer said the company expected to return to a revenue growth rate of between 11 percent and 17 percent in 2008 and 2009.

Union workers at Harley's plant in York, where top-selling heavyweight Touring and Softail bikes are made, overwhelmingly approved a new labor agreement on Feb. 22. Nearly 2,800 members of the International Association of Machinists and Aerospace Workers Local 175 had been on strike since Feb. 2. The approved contract calls for a 12 percent wage increase over three years. Starting wages for new employees will be lower, but they will be able to advance to the same maximum rate earned by current employees.

"Now that the strike is behind us, our employees are focused on moving ahead, and with the new contract, we are better positioned for the future," Ziemer said.