American motorcycle maker Harley-Davidson said Thursday that it expects to report $ 75 million in additional restructuring costs by 2020 related to a set of actions it refers to as “The Rewire,” including the disruption of its sales operations and Manufactured in India after 111 years of operations. in the country.
“Between August 6, 2020 and September 23, 2020, the Company approved commitments for 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 sentence.
The announcement comes two months after Harley unveiled a strategy to refocus on more profitable motorcycles and core markets like the United States.
Harley said earlier this year that it planned to downsize its product portfolio and exit lower-volume markets, without specifying which ones.
Of the $ 75 million of restructuring expenses that Harley expects to incur, 80% is expected to be cash expenses, including one-time termination benefits of approximately $ 3 million, non-current asset adjustments of approximately $ 5 million, and termination contract and other costs of approximately $ 67 million, the company stated in the regulatory filing.
Furthermore, the company said that it now expects total restructuring costs of around $ 169 million in 2020, and this will also include a reduction in the workforce of approximately 70 employees in India, a market where its annual sales volumes account for less than 5 % of the total company. . It expects to complete the approved restructuring activities by September 23 within the next 12 months.
In early July, when revealing its “Rewire” strategy, it said it would optimize its planned product portfolio by approximately 30% and focus on 50 markets with growth potential in North America, Europe and parts of Asia Pacific.
The announcement of the strategy came after Harley reported an unexpected quarterly loss due to outages caused by the coronavirus pandemic.
The company reported a loss of 60 cents a share during the quarter through June, compared with a profit of $ 1.23 a share a year ago. Analysts expected, on average, earnings to be 4 cents a share, according to IBES data from Refinitiv.
Revenues from motorcycles and related products plummeted 53% year-on-year to $ 669 million, affected by the temporary suspension of production during the quarter due to shutdowns to slow the spread of the new coronavirus.
Retail sales in the United States, its largest market, slumped 27% year-on-year, the steepest drop in at least six years.
Among those who fell the most on Wednesday in the S&P 500 was Harley-Davidson Inc. (HOG). The stock saw a 2.84% drop to $ 23.28 with 2.68 million shares changing hands.
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