Not selling enough
Harley-Davidson Inc. intends to go through with a plan to cut 300–400 jobs over the next two years.
The company’s first quarter profit fell by 37 per cent, due to slowing sales, with earnings down to $117.3 million to the end of March. A year earlier, the three-month earnings were $187.6 million.
H-D will ship between 264,000 and 273,000 motorcycles to dealers this year, down 10–13 per cent from 2008 shipments.
Revenue fell to only $1.29 billion for the quarter, down two per cent. The additional job cuts bring the total number of H-D jobs lost to between 1,400 and 1,500.
Wow….
117.3, down from 187.6 is a loss of 70.3 70.3/187.60 = 37.5 percent
Don’t make it any more complicated than that pls.
just wondering about joel’s point:
if their profit margin is at about 5.5% of their revenue, then a 2% of drop of revenue (assuming rest is somewhat fixed costs) would cause 37% drop in profit.
what fallows is cutting of those “fixed costs” to increase the profit margins (read: cutting jobs, because, apparently, people are simply numbers that can be simply moved around to the other side of equation to balance things out)
Manufacturing motorcycles is an industry with high fixed costs – big factories stuffed with expensive equipment and lots of staff. With that kind of operation, any decrease in sales quickly destroys profits. It’s like a lever, when things go well you make tons of money, when the opposite happens, the opposite happens.
Tony
Joel
Im thinking that with the US Gov’t dangling big bucks to the Captains of Democracy / Industry,
and HD’s influence as a significant Icon of Free Enterprise,
(They have a history of being protected before from foreign dumping of product in the USA (The any import bike over 700cc Tariff).
So like Cool Hand Willy D at the Poker Table of Capitalism, it seems that they are just waiting their turn to lament their sob story.
The numbers quoted are interesting and kind of make my head spin. I can’t understand the relationship between them.
The 1st quarter profits are down a sphincter tightening 37%. The shippments of new, finished product are down 10-13%. Yet Their revenue is down only 2%. What have they been doing to screw up their profit margin so much? How can revenue be so consistent yet profit suck so much air? They’ve likely not bought as much materials and have decreased their labor costs so wtf?
Last year this time my dealer literally had an empty showroom with only sold bikes waiting for pickup. This year, it’s full to the brim with unsold bike. Still, the summer is ahead, so for the 1st time in a LONG time they’ll struggle like anyone else.
The recent RM auction the other day revealed the same…nobody is buying…yet. Obsessive consumerism won’t disappear overnight.
For the naysayers, don’t overlook the fact that they’re still profiting and they’ve yet to fire sale anything! That’s admirable.
Im lovin’ it. When HD Canada instantly upped their prices to reflect our 80 cent dollar I was smelling a rat. For decades current inventory was always locked in until a price adjustment announced. New inventory would be affected. Im waiting for the Fall to see how many of these bikes are still sitting around gathering dust. What will Willy Davidson do then? Remember what happened when Dealers revolted against Buell. It will be a curious end to this riding season.