FOR about nine months now I’ve been writing about the Motor Company’s softening sales profile, its fiscal position, the impact both have been having on their share price, and the possible implications on their independence.
I have been writing-up reports on Harley-Davidson’s quarterly results since September 1993, so I guess in that time I have gotten pretty well attuned to the nuances of their reporting.
After a while you become pretty familiar with what can be gleaned between the lines – not so much between the lines of their press release text, as that is pretty meaningless BS at the best of times anyway, but between the lines of the numbers they release.
From the dangerously low ebb of 2009 when sales and share price had both gone into melt-down, Harley’s balance sheet management had been astute – even if question marks remain about the long-term wisdom of some of the decisions taken.
Following the Project Rushmore model announcements in 2013 Harley’s share price had recovered by April 2014 to around the same mid $70 territory seen at its pre-recessionary peak.
However, unlike their increasingly competitive rival Polaris Industries, whose sales and share price cycle very closely mirrored Harley’s own from 2009 to 2013, Harley has not managed to kick-on from there.
As discussed in our quarterly Harley fiscal review on page 14 of this edition of AMD Magazine, the past twelve to fifteen months have seen the company’s progress grind to a halt and then go into reverse.
To describe this as a “worry” is an understatement of massive proportions. It would appear that Mr Wandell’s retirement has been well timed and that his successor Matt Levatich is going to see some of the outcomes of the 2009 – 2013 strategy materialize on his watch.
Harley has kept the dividend it pays to its investors high, in order to keep them “on-side”. Indeed this year’s increase sees it at its second highest level ever. Unfortunately, just as the Project Rushmore MY2014 initiative appears to have failed to sustain dealer consumer traffic, the dividend, of itself, appears to have failed to sustain the share price.
The decline in new model sales seen in the final quarter of last year and since has been followed by a (albeit modest) loss of market share in the first quarter of this year that would be described as a recession if Harley was a country – two consecutive quarters of “negative growth”.