The motorcycle manufacturer Harley-Davidson experienced a 20% increase in its stock value on Wednesday following its announcement of selling a $5 billion loan portfolio to KKR and PIMCO for strengthening its financial position against declining sales and increasing tariff expenses. Through this transaction Harley-Davidson will obtain $1.25 billion in cash while reducing its debt by $450 million and maintaining control of its financing operations.
The company faces declining U.S. sales and rising tariffs that resulted in $17 million profit loss during the first half of the year. The company failed to provide its annual outlook because it remains uncertain about future trade policies and its quarterly earnings did not match market expectations. The unpredictable nature of tariffs has forced more than 100 U.S. companies to stop issuing financial guidance during the last few months.
The loan sale received positive feedback from analysts despite the company’s earnings performance. According to Garrett Nelson at CFRA Research the loan sale represents a strategic advantage despite ongoing fundamental challenges. The company plans to introduce its new low-cost “Sprint” model which will target young riders and enter international markets at a price below $6,000.
The second quarter net income at Harley-Davidson decreased to $108 million after reaching $218 million during the previous year. The sector-wide strain became apparent when Polaris joined other companies in refusing to provide guidance.
