Harley-Davidson’s shares jumped more than 20% on Wednesday after it announced a sale of loans worth more than $5bn to PIMCO, as the company looks to reduce its debt pile while navigating headwinds from tariffs and slowing demand.
The motorcycle maker, however, reported quarterly profit below estimates and withheld annual forecasts due to tariffs, noting a $17m hit during the first half of the year.
“Despite the earnings per share miss, shares traded higher pre-market as investors focused on the positive transaction aspects. In our view, while the deal is a positive, Harley faces major headwinds,” CFRA research analyst Garrett Nelson said.
Harley-Davidson plans to reduce its debt by $450m with the deal, while retaining full control and majority ownership of its financial arm.
The deal, which is expected to close in the second half of the year, is likely to generate $1.25bn in cash, the company said.
Leisure vehicle demand has been on a decline in the US, with consumers rethinking non-essential purchases in an uncertain economy. Harley has also struggled to win over younger riders, who prefer fuel efficient models with modern safety features.
On Wednesday, the legacy motorcycle maker confirmed the launch of its small and “Sprint” model, aimed at the US and international markets with a targeted entry price below $6,000.
Between February and now, close to 100 US companies have either withdrawn or cut their guidance as uncertainty over tariffs throws financial planning out of gear, with most of them from the consumer and automotive and transportation sectors, according to Reuters calculations.
Rival Polaris, which owns the “Indian” brand of motorcycles, also held back its full-year guidance.
In May, the company said it was evaluating an investment for its financial arm.
Harley-Davidson’s profit fell to $108m, or 88c per share, in the second quarter from $218m, or $1.63 per share, a year earlier.
Analysts on average had expected a profit of 96c per share, according to data compiled by LSEG.
Reuters
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