Harley-Davidson reported a higher quarterly profit, helped by a modest rebound in demand for its motorcycles in the United States, its No. 1 market. The Milwaukee-based company stuck by its forecast for annual motorcycle shipments, suggesting would-be buyers remained cautious and that it does not anticipate a surge in demand in the third quarter, the tail end of its traditional selling season. Harley-Davidson continues to expect to ship 259,000 to 264,000 motorcycles to dealers worldwide this year, up from 247,625 last year. The company’s annual worldwide motorcycle shipment levels peaked at about 350,000 units in 2006, right before the US housing bubble burst and consumer demand for its bikes - which are priced from US$8,000 to more than US$30,000 - plummeted along with the broader economy. Keith Wandell, Harley-Davidson’s chairman and chief executive, said on a call with analysts that he remains “cautiously optimistic” that the rebound in demand for the company’s bikes would continue to build. Although Wandell said recent signs of a recovery in the US housing market were “encouraging,” he noted factors that indicate uncertainty about the path for consumer spending. “I still question whether home-equity values have risen to the point where they were before, which is something that certainly affects us in the United States,” he said. “Unemployment, underemployment, you know, are still rather high. So we think there’s still somewhat of a drag in the economy.” Harley-Davidson’s second-quarter profit rose to US$271.7 million, or US$1.21 a share, from US$247.3 million, or US$1.07 a share, a year ago. Analysts, on average, expected a profit of US$1.18 per share, according to Reuters Estimates. Revenue rose 3.4 per cent to US$1.79 billion. In afternoon trading, Harley-Davidson shares were little changed, up 37 cents, or less than 1 per cent, at US$56.24. Although both earnings and revenue beat analysts’ average forecasts, at least one analyst was unimpressed by the results. Robin Farley, an analyst at UBS, said the earnings beat was driven by a one-time item, the reversal of a restructuring charge, and not by an improvement in Harley-Davidson’s business. The company said the reversal of the restructuring charge reflected a decision to keep a wheel-making plant in Australia open rather than close it and move the operation to China. As a result, the company booked a benefit of US$5.3 million in the second quarter, compared with a restructuring expense of US$6.2 million in the year-ago quarter. One big drag on Harley-Davidson’s results came in Japan, its No. 1 market outside the US and Canada, where the yen’s fall against the US dollar had what CFO John Olin said was a “significant financial impact” on the company’s bottom line. In all, Olin estimated the dollar’s strength during the quarter reduced Harley-Davidson’s second-quarter gross margin by US$13.4 million and shaved 4 cents from its reported earnings per share. He warned the headwinds were likely to continue in the second half of the year. “We do not expect it to be at the same magnitude that we’ve seen in the first half,” Olin said, “but again, things are certainly always very dynamic and changing in the world of currency.” Harley-Davidson said its independent dealers sold 90,193 new motorcycles in the second quarter, up from 85,714 bikes in the same period a year ago. Sales in the United States, where the company sells more than half its products, were up 4.4 per cent. Gross margins rose to 36.9 per cent in the second quarter from 35.9 per cent a year earlier. The operating margin in the sales of motorcycles and parts jumped to 21.9 per cent, compared with 19.7 per cent last year. The gains reflected the company’s four-year-long effort to lower manufacturing costs though flexible work deals with its unions and other changes in the way it makes its bikes. Harley-Davidson said when its restructuring program, which is expected to cost a total of US$485 million, is completed at the end of this year, it will save the company US$320 million a year.