Harley-Davidson Profits Slide Amidst COVID-19 Lockdown

Harley-Davidson's profits for the first quarter of 2020 fell by 45 per cent, as the global coronavirus pandemic significantly hit motorcycle sales around the world. Harley-Davidson has also posted lower quarterly earnings, and the company has said it has taken steps to address the impact of the COVID-19 pandemic on its business. The iconic American cruiser motorcycle manufacturer said it has reduced planned capital spending and also reduced planned spending "across every part of the organization including freezing hiring, temporarily reducing salaries and eliminating merit increases for employees in 2020."

Also Read: Harley-Davidson Withdraws Financial Forecasts For 2020

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New product launches at Harley-Davidson has been put on hold.

Jochen Zeitz, acting President and Chief Executive Officer of Harley-Davidson said, "COVID-19 has dramatically changed our business environment and it is critical we respond with agility to this new reality. We have determined that we need to make significant changes to the company; to our priorities, to our operating model and to our strategy to drive more consistent performance as we emerge from this crisis."

Also Read: Harley-Davidson Suspends US Production Over Coronavirus Crisis

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Harley-Davidson has withdrawn the company's financial outlook for 2020

Harley-Davidson has also implemented other aggressive cost management efforts such as retiming the launch of new products. In total, the company expects these efforts to preserve approximately $250 million of cash in 2020. However, sagging sales, which were a reason for concern for Harley-Davidson, particularly in the home market, continue to be aggravated, more so, during the COVID-19 lockdown period. While Harley-Davidson is looking to attract the next generation of younger riders with nimbler and sportier bikes, as well as a range of electric motorcycles, now those plans will be put in the backburner, as the company struggles with falling sales and revenue, in the middle of cost-cutting measures.

Also Read: Harley-Davidson Lays Off Staff, Cuts Salaries

Harley-Davidson said it has $1.47 billion in cash, but was talking to major US banks to secure an additional $1.3 billion in liquidity to ride out the crisis. Earlier in April, Harley-Davidson withdrew its 2020 profit forecast and decided to temporarily lay off most of its global production employees as well as cut salaries of its leadership team in a bid to lower costs. In the first quarter of 2020, Harley-Davidson's worldwide sales were down 17.7 per cent to 40,439 units from last year. Motorcycle shipments were also down 10 per cent to 52,973 units from last year.

(With agency inputs)



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