Harley-Davidson 1st-quarter profit declines 71 percent on sluggish motorcycle sales

Harley-Davidson 1Q profit skids 71 percent

NEW YORK — Harley-Davidson Inc. said Tuesday its first-quarter profit fell 71 percent as sales of its high-end bikes remained sluggish.

Harley-Davidson CEO Keith Wandell said the uncertain economy is likely to make business conditions challenging throughout the year.

Still, the Milwaukee company’s results beat analysts’ forecasts, sending shares climbing in premarket trading. The stock gained 93 cents, or 2.8 percent, to $33.70 in electronic trading before the opening bell.

Harley-Davidson reported a profit of $33.3 million, or 14 cents per share, in the three months ended March 28. That’s down from $117.3 million, or 50 cents per share, during the same period last year.

Excluding losses from discontinued operations, the Milwaukee company made 29 cents per share. Revenue during the quarter fell 19 percent to $1.04 billion.

Analysts expected a profit of 22 cents per share on $1.02 billion in revenue. Such estimates typically exclude one-time items.

The company said retail sales of its heavyweight motorcycles fell more than 18 percent worldwide, with sales in the U.S. falling by nearly a quarter. International sales fell a much smaller 2.8 percent.

The company reiterated its previous forecast to ship between 201,000 and 212,000 motorcycles to dealers in 2010, down between 5 and 10 percent from 2009. It plans to ship between 55,000 and 60,000 motorcycles in the second quarter.

The company has been looking to streamline its operations in recent years to deal with falling demand. Last year it announced the shutdown of its Buell sport-bike line and is trying to sell the premium motorcycle unit MV Agusta.

In December, Harley and its union agreed to a new seven-year contract at its main motorcycle assembly plant in York, Pa. Under the new contract, Harley is shutting down one of two factories there and laying off nearly half the unionized work force of about 1,950 employees.

A bright spot was a return to profitability for its captive finance arm, Harley-Davidson Financial Services, which had been losing money the last three quarters. The subsidiary turned an operating profit of $26.7 million in the first quarter. It attributed the improvement to lower borrowing costs and better credit performance in its portfolio of retail loans.