Harley-Davidson Inc cut its quarterly dividend to just 2 cents and suspended share buybacks on Tuesday to boost its cash reserves even as it reported a smaller-than-expected decline in quarterly profit.
The company said it has $1.47 billion in cash and was in talks with big U.S. banks to get an additional $1.30 billion in loan to deal with the drop in motorcycle sales due to lockdowns. Harley has already furloughed employees and cut salaries in a bid to lower its costs.
While Harley has been trying to woo the next generation of younger riders with electric and more nimbler bikes, that has done little to boost sales. To make matters worse, the coronavirus pandemic has crushed demand as Americans are forced to stay at home.
(Also read: Harley-Davidson lays off staff, cuts salaries amid coronavirus outbreak)
Harley's total motorcycle shipments to dealers fell 10% to 52,973 units in the first-quarter ended March 29, while retail sales at its dealers declined nearly 18% to 40,439 units.
The motorcycle maker said it would cut its cost to match the lower demand and focus its sales efforts in the United States, its biggest market.
Earlier this month, Harley withdrew its profit forecast for 2020, temporarily laid off most of its global production employees and cut salaries of its leadership team in a bid to lower costs.
(Also read: Former Harley-Davidson Boss joins Norton Motorcycles as Interim CEO)
In February, the company replaced its Chief Executive Officer Matt Levatich with board member Jochen Zeitz, best known for turning around the Puma brand's near-bankrupt business.
Harley's net income fell to $69.7 million, or 45 cents per share in the quarter, from $127.9 million, or 80 cents per share, a year earlier.
Motorcycles and related products revenue fell 8% to $1.10 billion.
On an adjusted basis, it earned 51 cents, beating analysts' average estimate of 41 cents, according to IBES data from Refinitiv.
This story has been published from a wire agency feed without modifications to the text.