American Motorcycle Dealer AMD 236 March 2019 - Page 64

Indian Up Overall In 4Q: BRIEFS Slingshot, Heavyweights Down; Middleweights Up NEWS Harley recorded a 6th place market share in Germany for 2018 at 10.09%, selling 10,929 units there for a +19.52% increase in share over 2017. Its top seller was the Street Bob (882 units), the 28th most popular motorcycle in Germany last year, followed by the Fat Bob 114 (35th), XL 1200X (39th) and Breakout 114 (42nd). Indian Motorcycle recorded a creditable 12th place in market share terms in Germany in 2018, selling 1,080 units for a 1.00% market share - its highest to date and +63.39% over its 2017 performance. Harley scored 5th place in market share terms in Austria in 2018, selling 1,079 units for a 7.73% share, up 14.18% over its 2017 performance. Market leader in Austria was KTM, in its home market, followed by BMW, Honda and Yamaha - meaning Harley is outperforming some significant players in a market that was worth 13,965 new motorcycle registrations in 2017 (+8.79%). Meanwhile, in Switzerland Harley scored fourth place in market share terms in 2018, taking 10.98% of the market, selling 2,694 units (which was actually down 183 units/- 6.13%) over 2017. The Swiss market was worth 24,544 new motorcycle registrations in 2018 (down from 26,910 units in 2017) with Yamaha the ‘Top Dog’ at 17.74% share, followed by BMW and Honda. Harley has confirmed that it will build its European models at the factory it commissioned in Q3 in Thailand. Further expansion of the initial build is already taking place. Polaris has reported their 4Q and 2018 full year fiscals, with adjusted sales for the fourth quarter of 2018 increased by +14% to $1,627 million. Full year 2018 reported net income was $5.24 per diluted share, up +95%; adjusted net income for the same period was $6.56 per diluted share, up +29%, which was near the high-end of previously issued guidance. Reported and adjusted sales for the full year of 2018 increased +12% to $6,079 million and $6,083 million, respectively. North American retail sales increased +6% for the quarter compared to last year; ORV North American retail sales were up low single digits, driven by side-by-side vehicle sales. Motorcycle segment sales, including PG&A, totaled $87 million, down 15 percent compared to the fourth quarter of 2017. Indian sales increased slightly, but were more than offset by the decline in Slingshot sales. North American consumer retail sales for the Polaris motorcycle segment, including both Indian Motorcycle and Slingshot, decreased high-teens during the 2018 fourth quarter. Indian Motorcycle retail sales decreased low double-digits, but their ‘middleweight’ models were up by low single digits. Slingshot's retail sales were down substantially during the quarter. Motorcycle industry retail sales, 900 cc and above, were down low double- digits percent in the 2018 fourth quarter. Indian Motorcycle gained market share for the 2018 fourth quarter on a year-over-year basis. Gross motorcycle segment profit for the fourth quarter of 2018 was $2 million compared to $5 million in the CONSOLIDATED STATEMENTS OF INCOME (LOSS) (in thousands US $) Three months ended December 31 Six months ended December 31 2018 2017 2018 Sales Cost of sales Gross profit 1,627,120 1,235,847 391,273 1,431,049 1,063,237 367,812 6,078,540 5,428,477 4,577,340 4,103,826 1,501,200 1,324,651 Operating expenses: Selling and marketing Research and development General and administrative Total operating expenses Income from financial services Operating income Net income 122,278 61,941 87,557 271,776 23,313 138,869 142,810 116,319 62,412 85,198 263,929 18,595 116,908 122,478 491,773 259,682 349,763 1,101,218 87,430 344,602 487,412 471,805 238,299 331,196 1,041,300 76,306 237,179 359,657 $0.49 $5.24 $2.69 Diluted Net income per share: $1.47 Scott Wine, CEO said that Polaris had been able to “adapt and execute our strategy to account for tariffs and other external pressures” fourth quarter of 2017. Adjusted for the Victory wind-down costs for both 2018 and 2017 fourth quarters, motorcycle gross profit was $2 million in the 2018 fourth quarter compared to $8 million for the 2017 fourth quarter. The decrease in gross profit 2017 was the result of negative product mix, along with tariff costs and higher logistics and commodity costs. Scott Wine, Chairman and Chief Executive Officer of Polaris Industries Inc., said that “between sales growth in almost all of our segments, improved operational efficiencies and a lower tax rate, we more than offset macroeconomic and tariff headwinds, generating a +29 percent increase in earnings per share. Growth and market share gains in Off Road Vehicles, and the acquisition of Boat Holdings, further expanded our position as the global leader in powersports and established Polaris as a leader in the attractive, profitable and growing pontoon market. “We are encouraged by our growth prospects for 2019 and beyond, but keenly aware of, and prepared for, the challenges and uncertainties presented by global trade and economic complications.”