Harley to Expand in Brazil - Analyst Blog

Harley-Davidson Inc. (HOG) has announced that it will expand dealership network in Brazil in order to compensate for the sluggish sales in the U.S. with the rapid growth in the international markets.

The motorcycle maker has reached an agreement with HDSP/Grupo Izzo, its exclusive dealer in Brazil, to appoint new retailers in the future. The dealer already operates nine retail outlets in Brazil. The expansion will cost Harley 6 cents per share in the fourth quarter of the year.

Harley has also opened an office in Sao Paulo. The company has been operating a factory in Manaus, Brazil since 1999, where it has been assembling motorcycles for the domestic market.

Apart from Brazil, Harley has also focused on other emerging markets such as India. The company will introduce a total of 12 models for the Indian market. It had established a subsidiary near Delhi and further plans to open five dealerships in the country by 2011.

Harley, a Zacks #3 Rank (Hold) stock, posted a 66% rise in profit to $93.7 million or 40 cents per share in the third quarter of the year from $56.4 million or 24 cents per share in the same quarter a year ago. The profit was in line with the Zacks Consensus Estimate.

The higher earnings were attributable to the company's aggressive restructuring actions and increase in profit for Harley-Davidson Financial Services. Operating income rose by 54% to $152.4 million from $99.1 million in the third quarter of 2009, driven by higher revenues in Harley-Davidson Financial Services.