Harley-Davidson’s 3rd-quarter profit drops

MILWAUKEE (AP) — A continued sluggish U.S. market for motorcycles pushed Harley-Davidson Inc.’s third-quarter profit down 15.3 percent, and the motorcycle maker said it expects next year to be difficult, too.

Domestic buyers are seeing oil prices rising and the home market crumbling, so they’re being cautious about spending, even when it comes to the iconic brand’s bikes, Chief Executive Jim Ziemer said in an interview.

Domestically, sales were down 2.5 percent in the three months ended Sept. 30, while the overall U.S. heavyweight market fell 4.4 percent. Overseas, Harley’s sales were up 8.8 percent. Worldwide retail sales of Harley-Davidson motorcycles were flat in the quarter, down 0.2 percent. Revenue dropped 5.8 percent to $1.54 billion from $1.64 billion last year.

The company had figured sales would be difficult, so they cut bike shipments and earnings expectations in September. Shipments were down 10.8 percent to 86,535 units.

Net income for the quarter totaled $265 million, or $1.07 per share, compared with a profit of $312.7 million, or $1.20 per share, a year ago.

The earnings decline still beat Wall Street projections. Analysts had expected a profit of $1.05 per share on revenue of $1.52 billion, according to a survey by Thomson Financial. Revenue was slightly above analyst expectations of $1.52 billion.

Harley-Davidson shares fell 28 cents, or 0.57 percent, to $48.67 midday Friday.

Ziemer said the results were disappointing but not unexpected. The company knew in September that sales were slowing and expects a challenging environment next year, he said.

“We know what we have right now. We’re going to manage the business prudently and cautiously, and err on the side of being very cautious,” Ziemer said.

The company lowered its earnings expectations for the year last month and maintained those Friday. It anticipates 2007 net income to drop 4 percent to 6 percent, to a range of $3.69 to $3.77 per share. Analysts have predicted earnings of $3.73, according to Thomson. The company reported a 2006 profit of $3.93 per share.

Harley also kept intact its 2008 earnings expectations of growth between 4 percent and 7 percent on moderate revenue growth and lower operating margins. It had previously forecast earnings growth between 11 percent and 17 percent for 2008 as well as 2009.

Last month, Harley-Davidson announced it was no longer providing 2009 guidance.

The Milwaukee-based company expects full-year shipments to be between 328,000 and 332,000 units, down from 349,196 units last year.