MILWAUKEE – Harley-Davidson expects new tariffs to increase its annual cost by $ 100 million as long as the trade dispute between the US and other countries continues.
Milwaukee executives spoke to investors on Tuesday For the first time since last month's announcement that the production of motorcycles sold in Europe would be relocated abroad to avoid retaliatory tariffs, the EU is putting an end to American exports.
This announcement triggered a series of critical tweets by President Donald Trump and there There was no indication that the government's attitude to trade would change, despite the GOP's calls for it.
"The tariffs are the biggest!" Tweeted the president on Tuesday. "Either a country that has treated the United States unfairly for trade is negotiating a fair deal, or it is beaten with tariffs, it's that simple ̵
With sales stagnating at home, Harley-Davidson has increasingly sought overseas buyers for its iconic motorcycles. The company did not discuss Trump's criticism, but CEO Matt Levatic stuck to his decision to relocate some production abroad for tariffs.
"It has further put pressure on our business and we've made the best decision due to the circumstances" (19659002) Harley-Davidson said it is working with the Trump government and other governments to try to eliminate the tariffs ,
In the short term, the cumulative impact of Harley-Davidson's tariffs charges will increase more than $ 55 million this year, the company said. Expenditure on raw materials such as steel and aluminum is $ 15 to $ 20 million, and EU tariffs increase another $ 30 to $ 35 million, according to Harley-Davidson
On average, the EU Tariffs increase the cost of motorcycles sold in Europe by $ 2,200, but the company absorbs all of these costs rather than pass the price increases on to customers.
Harley was one of the high-profile American companies that were singled out of Europe for the tariffs with Bourbon and Levis Jeans. Farmers are also hit because agricultural exports go abroad.
The Trump administration on Tuesday prepared a plan to send billions of emergency relief to the trapped peasants.
European-equipped fares have increased Unlike the end of the last quarter, ie July 1, the impact has yet to fully land at Harley-Davidson.
The company said Tuesday its targetting on operating profit margins this year dropped from 9.5 percent to 10.5 percent, down 9 percent to 10 percent.
Profits have been under pressure for quite some time, but Harley-Davidson has repeatedly surpassed Wall Street expectations by cutting costs. In addition to its plan to relocate overseas production of motorcycles destined for Europe, Harley-Davidson is also consolidating its assembly plant in Kansas City, Missouri, next year at its York, Pennsylvania plant.
The importance of overseas markets for Harley-Davidson plays every quarter in its sales figures.
US Revenues fell 6.4% in the last quarter, up 8.7% at the halfway point of the year. Sales in Canada fell 0.5 percent in the last three months, dropping 4.9 percent in the last six months.
At the same time, international sales rose 0.7 percent in the quarter and 0.5 percent in six months. Sales in Europe, the Middle East and Africa rose 3.6 percent in the quarter and 4.8 percent in the six months period. Sales in Latin America rose 9.1 percent in the quarter.
For the three months ended July 1, Harley-Davidson Inc. posted $ 242.3 million, or $ 1.45 per share. A year earlier, the company earned $ 258.9 million or $ 1.48 per share in Milwaukee.
Without cutting production optimization costs, earnings were $ 1.52 per share. This outperformed analysts surveyed by Zacks Investment Research at $ 1.35 per share.
Sales of motorcycles and related products decreased from $ 1.58 billion to $ 1.53 billion as sales in the US, Asia-Pacific and Canada declined. Sales in Latin America increased by 9.1 percent and sales in the EMEA region by 3.6 percent. Total revenue exceeded analysts' predicted $ 1.42 billion.
Stocks rose nearly 7 percent in the afternoon trade.
Elements of this story were generated by Automated Insights (http://automatedinsights.com) / ap) using data from Zacks Investment Research. Access to a Zacks share report via HOG at https://www.zacks.com/ap/HOG