Harley-Davidson exits India, books $75 mn in fresh restructuring costs2 min read . Updated: 24 Sep 2020, 04:39 PM IST
- The announcement comes two months after Harley unveiled a strategy to shift focus back to more profitable motorcycles and core markets such as the United States
- Harley said earlier in the year that it planned to reduce its product portfolio and exit lower volume markets, without specifying which ones
US motorcycle maker Harley-Davidson said on Thursday it expects to report $75 million in additional restructuring costs for 2020 related a set of actions that it refers to as “The Rewire," including discontinuing its sales and manufacturing operations in India after 11 years of operations in the country.
"Between August 6, 2020 and September 23, 2020, the Company approved commitments to additional restructuring actions under The Rewire related to optimizing its global dealer network, exiting certain international markets, and discontinuing its sales and manufacturing operations in India," the company said in a statement.
The announcement comes two months after Harley unveiled a strategy to shift focus back to more profitable motorcycles and core markets such as the United States.
Harley said earlier in the year that it planned to reduce its product portfolio and exit lower volume markets, without specifying which ones.
Of the $75 million restructuring expenses that Harley expects to incur, 80% are expected to be cash expenditures, including one-time termination benefits of approximately $3 million, non-current asset adjustments of approximately $5 million, and contract termination and other costs of approximately $67 million, the company stated in the regulatory filing.
Moreover, the company said it now expects total restructuring costs of about $169 million in 2020, and this will also include a workforce reduction of about 70 employees in India, a market where its annual sales volumes account for less than 5% of the company's total. It expects to complete the restructuring activities approved through September 23 within the next 12 months.
Earlier in July, revealing its "Rewire" strategy, it said that it would streamline its planned product portfolio by about 30% and focus on 50 markets with growth potential in North America, Europe and parts of Asia Pacific.
The strategy announcement came after Harley reported unexpected quarterly loss due to disruptions caused by the coronavirus pandemic.
The company reported a loss of 60 cents per share for the quarter through June, compared with a profit of $1.23 per share a year ago. Analysts had on average expected the profit to come in at 4 cents per share, according to IBES data from Refinitiv.
Motorcycles and related products revenue dived 53% year-on-year to $669 million, hurt by the temporary suspension of production during the quarter due lockdowns to curb the spread of the new coronavirus.
Retail sales in the United States, its biggest market, plunged 27% year-on-year, the steepest fall in at least six years.
Among the S&P 500’s biggest fallers on Wednesday was Harley-Davidson Inc. (HOG). The stock experienced a 2.84% decline to $23.28 with 2.68 million shares changing hands.