Harley-Davidson Inc (NYSE:HOG) reported stronger-than-expected quarterly financial results on Tuesday, lifted by increased motorcycle sales in key markets, including the United States.
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Harley's badly battered shares surged nearly 8 percent in early electronic trading in New York.
From the outside, the third quarter appeared to be a tough one for the iconic motorcycle maker, with several recalls tarnishing the roll-out of the Street, its first entirely new bike in more than a decade and its first Harley-badged lightweight motorcycle since the 1970s.
But appearances were apparently deceiving. Worldwide, the company's network of independent dealers sold 73,217 new Harley-Davidson motorcycles in the third quarter, up from 70,517 during the same period last year.
That helped the company report a third-quarter profit of $150.1 million, or 69 cents a share. While that was down from the $162.7 million, or 73 cents a share, it reported a year ago, it was well above the 59 cents a share analysts expected, according to Thomson Reuters I/B/E/S.
Retail sales at dealers in the United States, where Harley sells two-thirds of all its bikes, rose 3.4 percent during the quarter.
Harley said it continued to expect to ship 270,000 to 275,000 motorcycles to independent dealers and distributors worldwide in 2014, up 3.5 percent to 5.5 percent year over year.
The company, which rose to prominence thanks to its popularity with the Baby Boomer demographic in the United States, is working hard to appeal to new riders as its core customer group ages.
It has had some success in developing new products to appeal to a younger and more diverse consumers. But the company’s first, all-new platform, a lightweight bike called “the Street,” suffered an ill-starred debut this spring despite a very limited roll-out because of difficulties involving its far-flung supply chain.
In addition, the company was forced to recall 130,000 bikes, including more than 1,000 of the Streets.
At the same time, upstart competitors, including Polaris Industries Inc, <PII.N>, have set their sights on Harley’s heavyweight market with revived brands like Indian that share Harley’s storied history and resonate with riders, while long-time rivals, including Honda Motor Co Ltd <7267.T>, have introduced well-received starter bikes to compete with the Street.
In pre-bell trading on the New York Stock Exchange, Harley shares were last up about 6.6 percent.
(Reporting by James B. Kelleher; Editing by Jeffrey Benkoe and Nick Zieminski)