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Harley-Davidson reported quarterly results Tuesday.PHILIPPE WOJAZER/Reuters

Harley-Davidson Inc beat profit expectations on Tuesday as tighter inventories helped drive up prices and it reined in costs as part of Chief Executive Officer Jochen Zeitz’s restructuring plan, sending its shares up as much as 28 per cent.

Overall shipments were down only 6 per cent in the third quarter, recovering from a 59 per cent slump in the prior quarter, indicating a rise in demand for the maker of large cruisers.

The sharp recovery from the pandemic lows comes as CEO Zeitz looks to recharge the business by shifting the focus back to big bikes and traditional markets like the United States and Europe.

Harley also tightened supplies and cut production, driving up prices for pre-owned bikes, which used to be a drag on new motorcycle sales.

“We are managing inventory in line or rather a little short of demand,” Zeitz said. “Dealers are selling new bike at or very close to MSRP (manufacturer suggested retail price) and higher dealer profitability.”

Global dealer inventory was down 30 per cent in the quarter and Zeitz said the company was planning to exit 40 unprofitable markets.

The company exited the world’s largest two-wheeler market, India, last month and recently announced a plan to develop and sell a range of premium motorcycles under its brand name in the country along with Hero MotoCorp.

Retail sales in its biggest market, the United States, where Harley has not recorded a sales rise for the past six years, fell 10 per cent from a year earlier, but was much less than the 27 per cent slide in the second quarter.

Total expenses fell 26 per cent to $196.9 million in the quarter.

Net income rose 38 per cent to $120 million, or 78 cents per share in the third quarter ended Sept. 30. Analysts were expecting a profit of 21 cents per share, according to Refinitiv data.

Motorcycles and related product revenue fell to $964 million from $1.07 billion a year earlier.

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