The major maufacturers have filed their full-year results and nine-month updates over the past few weeks, which our financial editor, Roger Willis, has analysed individually and in depth as they have come in.
Here we compile them on one file for easy reference.
Europe’s largest motorcycle manufacturer, KTM Industries, revealed an eighth-consecutive annual record of rising revenue, profit and sales volume in preliminary full-year results for 2018.
Turnover was 1.7% up to £1.356bn. Operating profit rose by 21.5% to £140m, with an adjusted operating margin of 8.6%. Pre-tax profit reached £124.6m, a 22.4% improvement.
Volume grew by 9.7% to a total of 261,454 motorcycles. The KTM brand accounted for 212,899 of these, while Husqvarna added 48,555. The company also claimed disproportionately large market-share gains on both sides of the Atlantic. In Europe, where total bike sales grew by about 8% last year, KTM brands increased their registrations by 21.5% — corresponding to a market share of 11.7%. And in the declining US market, where overall numbers fell by 2.3%, KTM bucked that trend by putting on 8.5% and lifting share to 8.9%.
These successes were partly attributed to launches of the new KTM Duke 790, plus Husqvarna’s Svartpilen and Vitpilen street models.
During 2019, KTM Industries intends to shift production of smaller-capacity Husqvarna road bikes to its Indian manufacturing partner Bajaj — which already makes all the smaller KTM-branded road kit — to cut costs. And it has set a global sales target of 400,000 motorcycles annually by 2022.
DISMAL PICTURE AT YAMAHA
Full-year 2018 results for Yamaha paint an increasingly dismal picture of its main motorcycle business. Annual revenue from bikes was 2.2% down to £7.168bn, as total sales volume fell marginally by 0.3% to 5.374 million units. Associated operating profit plummeted by 20.8% to £382m.
Developed markets were responsible for most of the damage, with revenue sinking by 6.4% to £1.643bn and an operating loss of £119m — against a £34m loss in 2017. Europe was the biggest culprit. Volume dropped by 11.6% to 176,000 bikes and revenue was 5.2% lower at £921m. In North America, volume fell by 4.3% to 67,000 and revenue by 4.9% to £351m.
Emerging markets, principally in Asia, did better but were still slightly on the back foot owing to adverse foreign currency conversion. Volume increased by 0.4% to 5.039 million. But revenue was 0.9% down to £5.525bn and operating profit retreated by 3% to £501m.
Although every other company division apart from power products achieved positivity in terms of both sales revenue and income, Yamaha’s struggling motorcycle segment inevitably put a dent in its overall bottom line. While revenue rose by 0.2% to £11.733bn, operating profit declined by 6% to £987m and net profit was 8.1% down at £655m.
HARD REALITY HITS HARLEY
With any benefit from various initiatives outlined in its “More Roads” master plan yet to materialise, Harley-Davidson had a tough time in 2018, as full-year results to 31 December reveal. BDN financial editor Roger Willis reports.
Annual revenue from motorcycles and related products rose by just 1.1% to £3.769bn. Financial services turnover was 2.2% up, adding £567.6m. So total revenue increased by a slim 1.2% to £4.337bn. But operating profit plunged by 19.9% to £541.3m and pre-tax profit was 20.5% down on £520.9m. However, because of the lavish year-on-year cut in US corporate taxation courtesy of President Trump, net profit was actually 1.9% up at £403.2m.
The impact of absorbing punitive tit-for-tat tariffs on exports to Europe, rather than passing that cost burden on to customers, had become obvious in fourth-quarter figures, though. Harley incurred an operating loss of £45.2m on motorcycles and related products in those final three months. Overall quarterly operating profit was reduced to a mere £2.8m, translating into a pre-tax loss of £3.1m and negligible net income of £376,000.
The brand’s wholesale bike shipments worldwide during the year were reduced by 5.3% to 228,665 units. Global retail sales fell by 6.1% to 228,051 motorcycles, illustrating particularly sharp inventory management. US dealers took the hardest hit, shifting 10.2% fewer machines at 132,868. International sales were a marginal 0.4% up to 95,183.
Best news was to be found in Europe, where the decision to maintain prices without passing on a massive EU import duty hike was amply rewarded by customers. As a result, Harley’s biggest overseas market grew by 3.5% to 41,179, outstripping a 1.8% improvement for the European 601cc-plus segment in which its products reside.
The Asia Pacific region registered a 5.4% decline to 28,724. Of the two largest components within it, Australia sank by 21.2% while Japan made a 15% recovery. Latin America was positive, achieving 7.6% growth to 10,167. Canada was 3.9% down at 9690.
Wall Street investors reacted badly to these results, wiping 5% off Harley’s share price.
STRONG RECOVERY FOR POLARIS
On the face of it, 2018 was a year of strong recovery for dominant US powersports manufacturer Polaris Industries — but motorcycling activities didn’t contribute to such success.
Overall annual revenue climbed by 12% to £4.638bn. Operating profit put on 35.5% to £371.9m. Net profit almost doubled, 94.4% up at £255.8m, as President Trump’s generous corporate tax give-away kicked in. The company’s core off-road vehicles (ORV) division — encompassing side-by-side ATVs, quadbikes and snowmobiles — was primarily responsible for this resurgence. ORV revenue increased by 9.8% to £2.990bn.
As ever, Polaris was economical with details but a very different narrative affected its motorcycle business, featuring Indian bikes and Slingshot trikes. Annual revenue from the sector fell by 5% to £416.3m and fourth-quarter turnover plunged by 15% to just £66.4m. To gesturally explain that latter deterioration, we were told: “Indian sales increased slightly but were more than offset by the decline in Slingshot sales.”
We can assume widely-reported recall issues continue to plague the Slingshot brand. And the shine has gone from Indian because it’s beset with the same shrinking US domestic cruiser market and punitive European tariff problems afflicting Harley-Davidson. To address that export difficulty, Indian intends to “accelerate motorcycle production in Poland” during 2019. (Polaris has an already-established ORV manufacturing base in Poland, to serve the European market.)
TEMPERED SUCCESS FOR HONDA
Although some of its core Asian markets are weaker, Honda’s motorcycle business growth in the three quarters of its fiscal year to date appeared unstoppable.
Nine-monthly revenue from bikes rose by 6.1% to £11.323bn. Operating profit for the sector was 16.3% up to £1.734bn. Operating margin improved from 14% to 15.3%.
Global wholesale shipment volume during the period climbed by 5.9% to an all-time record of 15.68 million Honda-branded motorcycles, scooters and ATVs. About two-thirds of these were manufactured by wholly-owned subsidiaries.
In the developed world, European sales were 4.6% up to 181,000. Domestic Japanese performance improved by 24.6% to 157,000. But North America was 6.9% down at 216,000.
Asian countries accounted for the vast majority of sales, boasting a 5.4% increase to 14.187 million bikes. Within that, Honda’s four biggest markets were responsible for 11.36 million of them.
India led the field on 4.49 million. But that represented only 2.5% growth — an indicator of how expansion there is slowing due to tighter consumer credit availability. Indonesia recovered tremendously, adding 11.4% to 3.69 million. And Vietnam was 13.1% up at 2.095 million. However, Thailand declined by 2.1% to 1.086 million. In other regions, mainly Latin American countries, sales improved by 15.1% to 939,000.
In response, Honda has reduced its full-year shipment forecast by 2.2% to 20.4 million, which still represents a 4.3% year-on-year improvement. Its forecast for Europe has been raised, though, by 2.1% to 245,000, while North America has been downgraded by 3.1% to 310,000.
PROFITS PLUNGE AT SUZUKI
Despite growing global sales in the nine months of its current fiscal year to the end of December, profitability for Suzuki’s motorcycle business was scuppered by adverse foreign currency translation.
Retail sales volume for the period rose by 11.8% to 1.303 million motorcycles, scooters and ATVs. But revenue was just 0.7% up to £1.271bn. And operating profit plummeted by 91.6% to a mere £977,000.
All the good news came from Asia, where volume climbed by 16.8% to 1.07 million units and related revenue was 14.7% up to £671m. India was star of the show, with volume 34.3% higher at 472,000 and revenue rising by 20.1% to £284m. The Philippines and Indonesia also contributed significant improvements.
The developed world was a disappointment. European retail sales stagnated on 33,000 units and revenue fell by 17.2% to £185m. North American volume grew by 3.7% to 28,000 but revenue was 7.5% down at £147m.
A DIRTY WORD AT KAWASAKI
Despite growing bike sales, the motorcycle division of Kawasaki Heavy Industries has perennial profit issues, according to results for the nine months of its current fiscal year to date.
Overall three-quarterly divisional revenue increased by 5.3% to £1.589bn. Turnover from wholesale motorcycle shipments for developed countries, mainly in Europe, was also 5.3% up to £554m — based on 4.2% volume growth to 100,000 units. The number of bikes shipped into emerging markets was 11% higher at 253,000. But repatriated revenue from these rose by only 6.2% to £422m.
Combined utility vehicle, ATV and personal watercraft volume, predominantly destined for North America, improved by 9.3% to 47,000. Associated revenue was 5.9% up to £376m. General-purpose petrol engine sales delivered a 2.4% hike to £237m.
Given Kawasaki’s peculiar progressive income attribution slanted towards the latter half of each fiscal year, the division should have been out of red ink by its third quarter. But this was not the case. A very minor loss of about £200,000 replaced a nine-monthly operating profit of £22m at the same stage of the previous year.
The division said profitability had deteriorated due to a temporary increase in selling, general, administrative and promotional expenses. Higher costs for steel and other materials had also been a factor, as well as weak foreign currency translation from emerging markets. In response, it has reduced the full-year operating profit forecast by about 6% to £105m, on annual revenue predicted to advance by 4% to £2.424bn.
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