(Reuters) - Harley-Davidson Inc reported its biggest quarterly profit beat in two years on Tuesday and the motorcycle maker maintained its 2018 shipments forecast, as sales for its classic heavy touring bikes climbed overseas led by Europe.
The 115-year old Milwaukee-based company's demographic challenges in the domestic market are well documented - core customers are growing older and outreach efforts to attract new and young riders have yet to show results.
In addition, President Donald Trump's call to boycott the motorcycle manufacturer for its decision to move production for European markets overseas has only compounded the company's troubles.
Shares of the company were up 1 percent in trading before the bell. Rising costs and a tit-for-tat tariff war with China have weighed on the shares of most U.S. manufacturers. Harley's shares are down about 30 percent so far this year and have underperformed the broader S&P 500 index.
Analysts at Goldman Sachs last week cut the 12-month price target for the stock to $45 from $47. Similarly, brokerage BMO Capital Markets last Friday downgraded the company's shares, citing frustration with its performance.
The company still dominates the local heavyweight motorcycle market, but rivals such as Polaris are chipping away at its market share.
To counter weak demand at home, Harley has plans to make deeper inroads into some of the fastest growing two-wheeler markets in Asia through lightweight motorcycles.
But much of the strategy's success in a highly cost-competitive market like India will hinge upon the price of the new bikes. While Harley has declined to disclose a price range, it has said that the lightweight bikes will be a premium product.
Retail sales in the United States, which accounts for more than half of the company's sales, fell 13.3 percent in the three months ended Sept. 30 from a year ago. Analysts expect 2018 to be the third straight year of declining sales.
International retail sales, however, rose 2.6 percent. In Europe, retail sales rose 3 percent.
The company said its net income rose to $113.86 million, or 68 cents per share in the third quarter, from $68.21 million, or 40 cents per share, a year earlier. Excluding manufacturing optimization costs, the company earned 78 cents a share.
Revenue from motorcycles and related products rose 16.8 percent to $1.12 billion.
Analysts on average expected a profit of 53 cents a share and revenue of $1.07 billion, according to data from Refinitiv.
The company maintained its full-year shipments forecast range of between 231,000 and 236,000 motorcycles and said it expects motorcycle segment operating margin to be in the range of between 9 and 10 percent.
(Reporting by Rachit Vats in Bengaluru and Rajesh Kumar Singh in Chicago; Editing by Bernard Orr)