Harley-Davidson Inc. barely broke even in the last quarter of a year in which the struggling American icon got caught up in President Trump’s trade wars. The motorcycle maker’s shares plunged the most in a year.
Earnings per share were zero in the fourth quarter, the Milwaukee-based manufacturer said in a statement Tuesday. Excluding restructuring and tariff costs, profit was 17 cents a share, missing analysts’ average estimate for 29 cents.
Trump attacked Harley last year after it announced plans to shift some U.S. production overseas to sidestep levies imposed by the European Union. But the motorcycle maker has more than tariffs and angry tweets to blame for its performance. U.S. retail sales tumbled 10% in the three months ended in December, the eighth consecutive quarterly drop. Chief Executive Officer Matt Levatich is having trouble attracting younger riders and plans to offer cheaper bikes and sell more clothing and gear — including on Amazon — to reach new customers.
“2019 we expect to be another difficult year until major initiatives like More Roads start kicking in,” Levatich said in an interview, referring to a turnaround plan unveiled last year. “Everything is angled at that core issue of building riders in the U.S. and leveraging growth opportunities we have in the near term and internationally.”
Harley shares fell as much as 9.5% Tuesday — the biggest intraday drop since Jan. 30, 2018 — and finished the day down 5% to $34.76. The stock plunged 33% last year.
Retail demand dropped in Europe and Asia, sending worldwide sales down 6.7% last quarter. Levatich’s plans call for half of sales to come from outside the U.S. by 2027, up from about 42% last year.
Harley has been investing to expand a new plant in Thailand to boost exports and produce the majority of motorcycles sold in the EU and China by the end of this year, Levatich said. The company hadn’t previously specified where U.S. production would be shifted to avoid tariffs the EU implemented in retaliation for higher levies on steel and aluminum.
Trump said in August that he’d back a boycott of the company’s bikes for moving production out of America. Tariff costs of $100 million to $120 million this year will be eliminated in 2020, once the Thailand plant expansion is completed, executives said on an earnings call.
Levatich is introducing as many as five electric models, including lightweight, urban bikes to target growth in Europe and India. Analysts think demand for Harley’s first electric model, called LiveWire, will be limited because of its $29,799 price tag.