Harley-Davidson Rallies as The Loss Shrinks

Harley-Davidson Inc.'s fourth-quarter loss narrowed sharply as the motorcycle maker posted sharply lower restructuring-related expenses and its financial-services business returned to the profitability.

The adjusted loss wasn't as wide as analysts had feared and revenue beat estimates, prompting a rally in Harley shares Tues.

The company has been recreating itself as a smaller manufacturer, aiming to increase its presence outside the United States. as economic weakness has curbed demand for its high-end bikes. Harley last month introduced the first 2 motorcycles from its India factory, as it tries to expand in one of the world's fastest-growing two-wheeler markets and lower manufacturing costs.

The financing unit has been a bright spot in recent quarters as credit quality has improved. Harley tightened its lending standards in early 2009, making fewer loans to subprime borrowers and requiring larger down payments. In the latest quarter the segment posted a profit of $43.5 million, compared with a prior-year loss of $7.1 million.

Harley reported a loss of $46.8 million, or 20 cents a share, compared with a prior-year loss of $218.7 million, or 94 cents. Excluding items, restructuring-related and debt extinguishment charges, the loss was 18 cents. Revenue increased 20% to $917.1 million after plunging 40% a year earlier.

Gross margin rose to 29.6% from 20.3% amid a favorable product mix and currency fluctuations.

Harley-Davidson motorcycle shipments grew 24% from a year earlier after falling 53% a year earlier.

The company forecast 2011 motorcycle shipments of 221,000 to 228,000 up from 210,494 in 2010. For the current quarter it sees shipments of 51,000 to 56,000 motorcycles in line with 53,674 reported a year earlier.

It also projected 2011 capital spending of $210 million to $230 million, compared with capital spending of $170.8 million last year. It also lowered its costs estimates for its restructuring program begun in 2009 by $10 million to $25 million.


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