In regards to materials, aluminum and lumber costs saw the biggest increases, although the latter had come down quite a bit. Logistically, transportation costs have increased as shipping times have slowed. FOOD AND BEVERAGE GIANTS SOUND INFLATION ALARM To offset those pressures, Harley announced that beginning on July 1 it would implement a 2% pricing surcharge for select models for the remainder of the 2021 model year. The surcharge, which will not fully offset the raw material cost pressure, would add $200 to the price of a bike that would normally cost $10,000.
“We have continued to see inflation across all modes of freight as well as within raw materials, and we are forecasting this to continue throughout the fiscal year,” Harley-Davidson CFO Gina Goetter said on the company’s second-quarter conference call on Wednesday. Ticker Security Last Change Change % HOG HARLEY-DAVIDSON, INC. 40.65 -3.15 -7.19%
Inflation headwinds during the quarter were worth about five points of margin – two from raw materials costs and three from higher logistics rates. The Milwaukee-based motorcycle manufacturer has seen inflation across all modes of freight and in raw materials.
Harley reported motorcycle sales surged 131% year over year to $1.03 billion. That helped drive a 77% increase in total revenue to $1.53 billion, which exceeded the Wall Street estimate of $1.41 billion. GET FOX BUSINESS ON THE GO BY CLICKING HERE The inflation headwinds overshadowed Harley’s better-than-expected quarter.
PepsiCo Inc. warned last week that it was experiencing “ongoing inflation pressure” that would increase in the second half of the year. Other companies, including General Mills, Conagra Brands and Constellation Brands, echoed similar sentiments. Harley-Davidson is not alone in warning that inflation pressures are here to stay – at least over the short to medium term.
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