Harley’s Q2 2018 earnings event
So far in this series, we’ve covered analysts’ estimates for Harley-Davidson’s (HOG) Q2 2018 results. Overall, analysts expect its revenue, gross profit margin, and earnings to be weak due to sales challenges and lower profitability. Let’s review what to watch for in HOG’s Q2 2018 results.
Motorcycle segment recovery
In its June Form 8-K, Harley-Davidson stated that “EU tariffs on Harley-Davidson motorcycles exported from the U.S. have increased from 6% to 31%,” adding that “these tariffs will result in an incremental cost of approximately $2,200 per average motorcycle exported from the U.S. to the EU.” If the company passes on this extra cost burden to its consumers, its already weakening European sales could weaken further.
To avoid high tariffs, the company decided to shift the production of motorcycles made for the European market from US factories to international factories. This move didn’t please Donald Trump, who warned HOG on Twitter that if it were to move production internationally, it “will be taxed like never before!”
During its Q2 earnings event, Harley may provide details of its plan to move production internationally, which could be watched closely by investors. Steep auto tariffs could also hurt the profitability of automakers (XLY) such as Ford (F), Fiat Chrysler (FCAU), and General Motors (GM).
Harley’s electric motorcycle and other launches
Back in 2014, Harley-Davidson unveiled Project LiveWire, where it started offering demonstration rides of Harley’s electric motorcycle. In its Q4 2017 earnings presentation, the company revealed its intention to “invest more aggressively in electric motorcycle technology” and launch electric motorcycle in the next 18 months.
Harley might update investors about its electric motorcycle plans during its Q2 earnings event. Continue to the next part, where we’ll assess Harley-Davidson’s current valuation.