U.S. motorcycle maker Harley-Davidson Inc reported a higher-than-expected quarterly profit on Monday despite a dip in global sales and said it would ship more vehicles during 2016, sending its stock up nearly 10 percent in early trading.
“Although we expect the macroeconomic environment to remain challenging, we are confident we’ll continue to lead with our powerful brand,” Chief Executive Matt Levatich said in a statement.
Harley-Davidson, which commands more than half the U.S. big-bike market, has seen its share eroded in recent years as foreign competitors cut prices to entice new buyers and due to anemic demand for its motorcycles.
When it reported third-quarter earnings in October, the Milwaukee-based company, which has been manufacturing motorcycles for over a century, announced a marketing campaign to increase brand awareness in the face of steep discounts from foreign rivals taking advantage of a strong U.S. dollar.
Harley-Davidson said worldwide retail sales slipped 0.6 percent to 46,857 units, while it fell 3.4 percent to 26,044 units in the United States during the fourth quarter ended Dec. 31. Despite the drop, the company’s U.S. market share ticked up slightly to 58.4 percent.
The iconic motorcycle maker has been trying to branch out beyond its aging Baby Boomer base and to entice younger riders with lighter models. The company said Thursday there was strong demand for its newer models.
Executives said on a conference call with analysts that seven out of 10 buyers of its smaller Street model were new to the brand.
Harley-Davidson said it expects to ship 269,000 to 274,000 motorcycles in 2016, an increase of about 1 percent to 3 percent from last year, and 78,000 to 83,000 motorcycles in its first quarter, compared to 79,589 motorcycles shipped last year.
Net income fell to $42.2 million, 22 cents per share, in the fourth quarter, from $74.5 million, or 35 cents per share, a year earlier. [nPnD3LqP]
Revenue slipped 2.3 percent to $1.01 billion.
Analysts, on average, had expected earnings of 19 cents per share on revenue of $1.03 billion, according to Thomson Reuters I/B/E/S.
Up to Wednesday’s close of $37.49, shares had fallen 17.3 percent this year. In morning trading on Thursday, Harley shares were up 8.7 percent at $40.76 after earlier surging nearly 10 percent.