By Dhirendra Tripathi
Investing.com – Harley-Davidson stock (NYSE:HOG) rose 7% in premarket trading Tuesday after strong demand in North America and higher prices for its iconic motorcycles helped it deliver a surprise profit.
Adjusted profit per share came in at 15 cents when a loss of 34 cents was expected.
Under Jochen Zeitz, who took over as CEO two years ago, Harley-Davidson has cut costs and focused on selling higher-priced products to its loyal customers in the developed markets of U.S. and Europe.
Motorcycle sales rose 39% in volumes in the fourth quarter. Unit sales in North America were higher by 8% though other markets struggled, a natural outcome of the company’s move to exit unprofitable product segments and countries. Extended shipping times in international markets also hurt. Higher supply chain costs and tariffs in Europe eroded fourth-quarter gross margins by 2 percentage points.
Total revenue rose 40% to $1 billion, more than half coming from motorcycles.
The company is expecting revenue from motorcycles and related products to grow 5%-10% this year, assuming supply chains improve.