With news from Harley-Davidson, A.O. Smith and Briggs & Stratton
Harley faces slower third quarter
Tighter credit markets and slower consumer spending took a toll on Harley-Davidson Inc.’s third quarter. The company posted net income of $166.5 million, or 71 cents per share, down from $265.0 million, or $1.07 per share, for its third quarter 2007.
The Milwaukee motorcycle manufacturer’s revenue for the quarter fell to $1.42 billion from $1.54 billion a year earlier.
"In the U.S., dealer retail sales of new Harley-Davidson motorcycles in the quarter were in line with our expectations," said Jim Ziemer, chief executive officer of Harley-Davidson. "Although Harley-Davidson retail motorcycle sales in international markets overall continued to grow double digits in the quarter, unit sales in several European countries slowed more than we anticipated during September as a result of deteriorating economic conditions. We continue to carefully monitor all markets in light of the potential impact of the current economic realities."
For the full year 2008, the company has narrowed its shipment expectations to 303,500 to 306,000 Harley-Davidson motorcycles.
The company has narrowed its expectations for diluted earnings per share for the full year to $3.00 to $3.10 from the prior range of $3.00 to $3.18.
"We also have been able to maintain Harley-Davidson Financial Services’ position as a stable, consistent source of financing for dealers and retail customers during these turbulent conditions in the credit markets," Ziemer said. "Prudent management and customer access to credit will continue to be priorities at HDFS … Going forward, we expect the global economy and consumer concerns to continue to create challenges for Harley-Davidson through the end of the year and in 2009. I remain confident about our future as we continue to manage and reinvest in the business."
A.O. Smith’s earnings tumble
A.O. Smith Corp., a Milwaukee-based manufacturer of water heaters, reported third quarter net earnings of $21.4 million, or 70 cents per share, down from $24.7 million, or 79 cents per share, in the same period a year ago.
The company’s net sales increased to $602.7 million from $553.5 million.
"In the third quarter, we continued to see strength from our commercial and Chinese businesses in spite of the very difficult conditions in the broader economy," said Paul Jones, chairman and chief executive officer. "Also, we generated more than $55 million in operating cash flow during the quarter and reduced our leverage ratio to less than 30 percent of our capital. Based on our strong performance in the third quarter and the confidence in our operating units’ ability to manage costs in spite of market volatility, we increased and narrowed our 2008 guidance from our previous estimate of $2.70 to $2.85 per share to earnings of between $2.80 and $2.90 per share."
‘Financial turmoil’ clips outlook for Briggs & Stratton
Briggs & Stratton Corp. recently posted a fiscal first quarter net loss of $2.0 million, or 4 cents per share, which actually was an improvement from a loss of $20.8 million, or 42 cents per share, in the same period a year ago.
The Milwaukee-based manufacturer of lawn mower engines and generators reported quarterly sales of $458.2 million, up from $367.1 million a year earlier.
The company has expanded its projected range of net income and is now estimating a range from $40 to $50 million or $0.81 to $1.01 per diluted share for the full year. The range reflects the impact of increased portable generator sales in the first quarter that were not in the company’s initial projections for the year.
"However, the forecast range now also reflects the risk that the sales of lawn and garden equipment and pressure washers in the spring of 2009 may be weaker than projected. This could occur because the financial turmoil now taking place is significantly affecting consumer confidence and may also lead channel participants (retailers and equipment manufacturers) to review their working capital commitment. The negative influence of either, or both, of these factors could cause the market for our engines and end products to decline greater than others are forecasting at this time," the company stated today.