CHICAGO (Reuters) - Harley-Davidson Inc. (NYSE:HDI - news) on Wednesday posted a 16 percent increase in third-quarter profit as demand for its iconic motorcycles rose more than the market, sending shares up more than 6 percent.
Net income increased to $264.9 million, or 96 cents a share, from almost $229 million, or 77 cents a share, a year earlier. Analysts on average were expecting 90 cents a share, according to Reuters Estimates.
Sales rose 10 percent to $1.43 billion, meeting Wall Street's expectations, as demand for Harley motorcycles outpaced the total industry in each of the company's major markets.
"Not only were retail sales good in the quarter, outperforming the market, but also the guidance for next year is up 6 to 7 percent, which is in line with what the Street had," said FTN Midwest Research analyst Brian Rayle, who has a "neutral" rating on Harley's stock.
Investors have been concerned about whether the Milwaukee-based company can achieve its long-term growth targets amid fears of slowing retail demand for its Harley brand.
Shares of Harley, whose competitors include Honda Motor Co. Ltd. (7267.T) and Kawasaki Heavy Industries Ltd. (7012.T), have slid almost 25 percent so far this year, compared with a 2.2 percent decline in the Standard & Poor's 500 index (^SPX - news).
"Our motorcycles sold at a brisk pace in all of our worldwide markets," Chief Executive Jim Ziemer said in a statement, citing a 12 percent increase in U.S. retail sales of the Harley brand motorcycles.
Retail sales rose 11.5 percent in Europe and 13 percent in Japan. Retail sales worldwide rose 12.1 percent.
The company said it remains on track to ship 329,000 Harley motorcycles this year and affirmed its 2005 profit outlook.
In July, Harley raised its earnings-per-share growth target for the year due to share repurchases to between 10 percent and 13 percent from a previous range of 5 percent to 8 percent.
Given uncertainty surrounding consumer confidence, increasing fuel prices and rising interest rates, the company set a 2006 shipment target range of 348,000 to 352,000 Harley motorcycles, Ziemer said, calling it a "conservative outlook."
Harley also broadened its long-term forecast on wholesale unit growth to 5 percent to 9 percent annually, he said. That supports an annual earnings-per-share growth target in the range of 11 percent to 17 percent.
It previously said its longer-term growth forecast for motorcycle unit shipments was 7 percent to 9 percent, supporting earnings-per-share percentage increases in the mid-teens.
Third-quarter sales from Harley motorcycles rose 11.4 percent to $1.11 billion, while global shipments increased 8.7 percent to 87,585 units.
Harley's gross profit margin in the quarter improved to 39.2 percent of sales, compared with 38 percent a year before, due mostly to strong sales of higher-profit vehicles.
In trading before the market opened, Harley shares were up $3.00, or 6.6 percent, to $48.60 on the Inet electronic brokerage from Tuesday's New York Stock Exchange
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Topic: Harley Profit Jumps (Read 2376 times)