 Wall Street Journal Says Harley Cuts More Staff
Harley-Davidson Inc.'s second-quarter earnings plunged 91% amid its planned decline in shipments as the motorcycle maker will cut 1,000 more jobs and slashed its forecast for shipments again.
The company said it would cut another 700 hourly production workers and 300 nonproduction, mostly salaried workers, as a result of the lowered shipment volume. It slashed its expectations for this year's shipments, saying it now expects to ship 212,000 to 228,000 motorcycles this year, compared to April's estimate of 264,000 to 273,000.
Harley Davidson had already cut 1,400 to 1,500 hourly jobs earlier this year. The company has about 9,300 workers.
The high-end motorcycle manufacturer, which for years couldn't make enough motorcycles to meet demand, has been curtailing production and cutting jobs during the downturn. The credit crunch wreaked havoc on its finance unit, its main source of financing for buyers. However, Harley said in May that it had secured the $1 billion it needs to fund the finance unit for the year. The company also has been working to diversify its customer base to include women and young riders.
The company on Thursday also boosted its expectation of the restructuring charges it faces, saying they will likely total $160 million to $190 million through 2010. The prior range was $40 million less. It also anticipates 2009 cost savings of $70 million to $85 million this year, compared to its earlier estimate of $25 million, and said ongoing annual savings will likely total $140 million to $150 million.
Meanwhile, Harley Davidson the company reported a profit of $19.8 million, or 8 cents a share, down from $222.8 million, or 95 cents a share, a year earlier. The latest period included $101.1 million in write-downs and charges.
Revenue decreased 27% to $1.15 billion as overall motorcycle retail sales fell 30%. Retail sales fell 35% in the U.S. and weakened 18% in international markets.
Analysts polled by Thomson Reuters expected earnings of 24 cents on revenue of $1.18 billion.
Gross margin fell to 33.5% from 35.7% as shipments declined 28%, as expected.
Chairman and Chief Executive Keith Wandell, who assumed the office in May, said although the fundamentals of the company's brand remains strong and its dealers' retail sales fell less than its competitors, "it is obviously a very tough environment for us right now, given the continued weak consumer spending in the overall economy for discretionary purchases."
The company's financial services segment swung to a $62.1 million loss on the charges, which included reclassification of finance receivables.
It also said it was still considering what to do with its operations in York, Pa. Earlier this year it announced plans to consolidate paint and frame operations at the facilities into one plant, but it said Thursday it has since determined that the York operations aren't competitive or sustainable. It said it expects to make a decision on the status of the operations later this year. | 
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