Motorcycle maker Harley-Davidson Inc. reported a higher-than-expected quarterly profit as a recovering U.S. economy drove demand, and it raised its forecast for full-year shipments.
The company, whose shares were up 11 per cent in afternoon trading Tuesday, said its sales of new motorcycles in the second quarter posted their first year-over-year quarterly rise in the United States since the fourth quarter of 2006.
"I think Harley has done a very good job diversifying its ridership base over the past several years," said Sharon Zackfia, an analyst at William Blair & Co. "They're No. 2 in market share now in Europe. They're No. 1 in young riders in the U.S. under 35, which is a big change from 10 years ago."
Sales of new Harley motorcycles rose 7.5 per cent in the United States and 5.6 per cent worldwide in the second quarter.
Prices of used motorcycles have been rising in the United States as financially weakened consumers opt for used motorcycles, and those higher prices are now drawing buyers back to new models, Ms. Zackfia said.
"It's been more of a battle against their own product, if you will, to get the new bikes into positive territory again," she said.
International sales are expected to pick up in the second half, said James Hardiman, an analyst at Longbow Research.
First-half sales were hindered by supply-chain disruptions related to Japan's earthquake and tsunami disaster, while the company's sales in Brazil were "offline" as the company restructured its dealerships there, he said.
"Certainly as we work our way through the year, Brazil should be a lot better than it was," Mr. Hardiman said. "It is a country that in theory has a lot of bike demand."
Profit from continuing operations for the second quarter ended June 26 rose to $190.6-million (U.S.), or 81 cents a share, from $139.3-million, or 59 cents, a year earlier.
Analysts on average expected the Milwaukee-based company to report a profit of 71 cents a share, according to Thomson Reuters I/B/E/S. Revenue rose 18 per cent to $1.34-billion, beating the average analyst forecast of $1.26-billion.
Harley-Davidson said it now expects to ship 228,000 to 235,000 motorcycles to dealers and distributors worldwide in 2011, compared with an April forecast of 215,000 to 228,000.
In the third quarter, Harley-Davidson expects to ship 60,000 to 65,000 motorcycles.
Improving demand for leisure vehicles was also evident in the earnings of all-terrain vehicle maker Polaris Industries Inc., which also reported stronger-than-expected earnings. Shares of Polaris, also raised its outlook for the year.