Motorcycle manufacturer Harley-Davidson Inc. (NYSE: HOG) reported a sharp drop in quarterly net income for the first quarter of its fiscal year. The company reported that net income for the quarter was $127.9 million, compared to $174.8 million in 2018. The numbers show a decline of nearly 27 percent year-over-year.
First quarter revenue was $1.38 billion, falling from $1.54 billion in the same quarter a year ago. Despite the declines, the company still beat analyst expectations for adjusted earnings. The company reported adjusted earnings of $0.98 a share, well ahead of the $0.86 that analysts were expecting.
In its earnings announcement, Harley-Davidson reported that the total number of motorcycles sold during the quarter fell 4 percent year-over-year. The company blamed the impact of tariffs from the U.S., China, and Europe for hurting sales. Tariffs from Europe and China have limited the company’s exports, reducing revenue, while U.S. tariffs on steel have saddled the company with higher raw material costs.
The motorcycle manufacturer is also coping with reduced demand as their core customer ages. Harley-Davidson started working on this problem back in 2017, when the company unveiled a 10-year plan to attract 2 million new riders by 2027. As part of that plan, the company will be creating schools across the country aimed at teaching people how to ride their motorcycles.
Harley-Davidson also reported that demand for higher-priced models fell sharply during the latest quarter. The company is now ramping up its investment in electric bikes and plans to introduce a high-end electric motorcycle priced at $30,000 later this year. The motorcycle manufacturer started to preview its LiveWire electric motorcycle in the U.S. and Europe last November.
After Harley-Davidson released its earnings report, U.S. President Donald Trump pledged to retaliate against the “unfair” European Union tariffs affecting the company’s earnings. That is a dramatic turnaround from the president’s stance on the company just last year. When Harley-Davidson executives announced plans in 2018 to move production of its motorcycles destined for the EU to overseas facilities from the U.S. to avoid EU tariffs, Trump called for a boycott against the company.