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Harley-Davidson cut its dividend 95% and has begun developing a new strategic plan after the COVID-19 pandemic choked first-quarter sales.
Profit at the Milwaukee-based manufacturer fell 46 percent from a year ago to $69.7 million, or 45 cents per diluted share, as revenue from motorcycle sales slipped 8 percent to $1.09 billion. Wall Street analysts surveyed by Refinitiv were anticipating earnings of 41 cents a share on revenue of $1.04 billion.
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Global sales were “significantly impacted by COVID-19” as U.S. sales fell 15.5 percent year-over-year to 23,732 motorcycles. Worldwide sales dropped 17.7 percent to 40,439.
“COVID-19 has dramatically changed our business environment, and it is critical we respond with agility to this new reality,” Jochen Zeitz, acting president and CEO of Harley-Davidson, said in a statement.
Harley-Davidson reduced its quarterly payout to 2 cents a share from 38 cents and has suspended share buybacks, along with putting a freeze on hiring and merit pay increases. The company had $2.47 billion of liquidity at the end of the quarter, including $1.47 billion cash.
“The crisis has provided an opportunity to reevaluate every aspect of our business and strategic plan,” Zeitz added. “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.”
Harley withdrew its 2020 guidance on March 26 due to uncertainty caused by COVID-19.
Going forward, the company will execute a number of actions, in what it has dubbed the Rewire, which will result in a new five-year strategic plan that will incorporate key products and initiatives from its More Roads plan.
The Rewire will return focus to company strengths and re-evalute plans to reach new riders by prioritizing the markets that matter most. Harley will also reset product launches, build up its parts, accessories and merchandise businesses and adjust its organizational structure. More details will be provided in the second quarter.
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Harley-Davidson shares slid 49 percent this year through Monday, a sharper drop than the 11 percent fall on the S&P 500.
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