Plummeting U.S. sales at Harley Davidson, months after announcing it would shift production out of the country due to President Trump’s tariffs on steel and aluminum imports and retaliatory levies, underpinned a double-digit drop in profits in the fourth quarter of 2018.
Overall, net income fell nearly 94 percent to $495,000, the Milwaukee-based company said on Tuesday. Adjusted for tariffs and restructuring costs, Harley reported profits of $27 million , or 17 cents a share, less than the 28 cents per share that analysts expected. Revenue was $955 million in the three months through December, also less than Wall Street predictions.
U.S. sales dropped 10 percent in the quarter, while sales in Asia dropped 6.2 percent. In Europe, where Harley is shifting some manufacturing, sales fell 1.4 percent. The 2018 challenges at Harley “reinforced the commitment” for the firm’s turnaround plan, according to CEO Matt Levatich.
"Our plan addresses the challenges of today and the opportunities we see for growth ahead, and we are energized by the momentum we are building,” he said in a statement.
As part of the strategy, Harley expects to introduce new products in 2019 to “inspire a new generation” of riders and expand where customers can purchase its motorcycles.
After visiting the White House shortly after Trump took office, Harley announced last year it would shift some manufacturing operations out of the U.S. due to the double-digit tariffs on steel and aluminum imports and the subsequent retaliatory levies imposed by the European Union and others.
In tweets, Trump called for a boycott of the iconic motorcycle brand and blasted the company for its decision, stating that customers and “your now very HAPPY competitors” would not forget.
The company on Tuesday said expects to incur up to $60 million in additional operating costs in 2019, less than prior estimates. In 2018, tariffs added $24 million additional costs.