Profit warning reverses Harley-Davidson

By midday on Wednesday shares of Harley-Davidson, the Milwaukee-based motorcycle manufacturer, were down 17 percent, to $48.84.

The slide was due to warnings that earnings were lower than expected and an announcement that the company would cut production.

U.S. motorcycle sales were flat in the first quarter, falling short of expectations, and estimates are that second-quarter sales well be lower than those of last year.

Earnings on the year are expected to rise by around 5 to 8 percent. This projection is down from an earlier estimate that earnings would rise 15 percent in 2005. The company expects to ship 329,000 units this year, up 3.7 percent from last year but 10,000 units fewer than earlier predicted.

The decrease in production is expected to occur almost exclusively in the second quarter and could put in jeopardy the company’s goal of producing 400,000 bikes in 2007.

However, Harley CFO Jim Ziemer, who will shortly become the company’s chief executive, maintains that today’s news should not affect the company’s long-term per-unit growth target of 7 to 9 percent per year.

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