Harley to cut 1,100 jobs as 4Q profit falls
By DAN STRUMPF, AP Auto Writer Dan Strumpf, Ap Auto Writer
1 min ago

NEW YORK – Harley-Davidson Inc. said Friday it will cut 1,100 jobs over two years, close some facilities and consolidate others as it grapples with a slowdown in motorcycle sales.

The Milwaukee-based company also reported its fourth-quarter profit fell nearly 60 percent, and said it is slashing motorcycle shipments in 2009 to cope with reduced demand.

The iconic motorcycle maker said it will consolidate two engine and transmission plants in Milwaukee into its facility in Menomonee Falls, Wis. It will shrink its paint and frame operations in its York, Pa., plant and close its distribution facility in Franklin, Wis., whose duties will be handled by a third party.

Harley also said it will end its domestic transportation fleet operation.

The company said the cuts include 800 hourly production positions and 300 non-production, mostly salaried positions. It said 70 percent of the job cuts will occur this year and the rest in 2010.

The cuts will result in one-time charges of $110 million to $140 million over 2009 and 2010, Harley said. Once they are finished, the cuts will save between $60 million and $70 million per year.

Harley has been stung by the rapid downturn in motorcycle demand. The economic recession has prompted many consumers to put off purchases of its high-end bikes, while the credit crunch has kept some would-be customers from obtaining financing.

Meanwhile, the company remains in the midst of a shake-up among top management. Chief Executive Jim Ziemer said last month he would retire in 2009, and the company remains in the process of finding a successor. Sy Naqvi, the head of Harley's troubled financial-services arm, resigned earlier this month. Chief Financial Officer Tom Bergmann has taken on Naqvi's old duties until a replacement is found.

Harley said worldwide retail sales fell 13.1 percent in the fourth quarter, with sales in the U.S. — its biggest market — falling nearly 20 percent. International sales crept higher, though, and the overall heavyweight motorcycle sales fell 25.5 percent in the same period, Harley said.

For the full year, worldwide retail sales fell 7.1 percent.

Harley said it is slashing new motorcycle shipments in 2009 to between 264,000 and 273,000 to cope with the down market. That would be a drop of 10 percent to 13 percent from a year earlier.

In 2008, Harley said it shipped 303,479 new motorcycles, down 8 percent from 330,619 new motorcycles in 2007.

Harley said its fourth-quarter profit fell 58 percent to $77.8 million, or 34 cents per share, for the quarter ended Dec. 31, compared with $186.1 million, or 78 cents per share, in the same quarter last year.

Revenue fell 6.8 percent to $1.29 billion from $1.39 billion in the year-ago quarter.

The results fell short of Wall Street estimates. Analysts surveyed by Thomson Reuters expected 57 cents per share on sales of $1.29 billion, on average.

Harley said its financial-services division swung to an operating loss of $24.9 million in fourth quarter, hurt by write-downs totaling $63.5 million. The company said it is evaluating "a range of options" to provide funding for the ailing Harley-Davidson Financial Services. Many analysts have suggested the lending unit may have to be sold because it has been unable to unload its debt in the financial markets.

For the full year, Harley said its earnings fell 30 percent to $654.7 million, or $2.79 per share, from $933.8 million, or $3.74 per share, in the same quarter last year. Sales fell 2.3 percent to $5.59 billion from $5.73 billion in 2007.

Analysts expected $3.02 per share on sales of $5.61 billion in revenue for the year. Harley said it would not provide earnings guidance for 2009, but analysts call for $2.15 per share.

Shares of Harley plunged $2.20, or 17.7 percent, to $10.20 in premarket trading on Friday. The stock is down 69 percent in the last 52 weeks.

 

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