After Harley Davidson posted a drop of around 27% in its Q1 profits, President Trump pledged to fight back against ‘unfair’ EU tariffs. The company had blamed them as being the cause of the profit fall.
Although Trump had earlier called to boycott Harley, he appeared sympathetic to its cause, saying it was EU tariffs that led it to move jobs abroad.
Last year, Harley had announced that it would be shifting production overseas to avoid sanctions placed against USA by the EU. This caused Trump to threaten higher taxes on the company.
Harley hasn’t yet moved any manufacturing overseas. However, it did move production facilities for EU-based motorcycles to Thailand, which also sustained ASEAN demand. No American jobs were affected by this move.
European taxes on imports, higher costs of raw materials due to US tariffs and falling demand was behind the company’s falling profits.
Refinitive had predicted an earnings of 65 cents/share and revenue of nearly $1.2 billion. The actual result came out to 98 cents/share and around $1.2 billion in revenue.
On a consolidated revenue basis of around $1.38 billion, Harley’s Q1 net income stood at $127.9 million, which was around 27% less than $174.8 million earned last year in Q1.
Revenue from its core businesses dropped by 12.3% compared to last year.
Restructuring costs and tariff impact set aside, the company’s income stood at 80 cents/share as opposed to $1.03 last year.
The shares dropped 1.6% on release of the report. It had risen 2% earlier.
Ever since earnings did not match up to analyst expectations last quarter, Harley has been worried. The younger generation in the US does not seem to favor motorcycles as much as previous generations.
The company is trying to attract young riders again. It released a plan for 10 years, to add 2 million young riders by around 2027. It has also set up bike-riding schools throughout the country. It also offered a preview of LiveWire motorcycle, which is electric, across Europe and the US, to attract more customers.