On Thursday, US motorcycle manufacturer Harley-Davidson said it expects to record $75 million in additional restructuring costs for 2020 related to a series of measures it refers to as “The Rewire,” including the discontinuation of its Indian sales and production operations after 111 years of operations in the region.
Between August 6, 2020 and September 23, 2020, the Company accepted commitments under The Rewire for additional restructuring measures related to the enhancement of its global distributor network, the exit of some foreign markets and the discontinuation of its Indian sales and manufacturing operations, “the Company said in a statement.”
The announcement comes two months after a plan for turning emphasis back to more lucrative motorcycles and key markets such as the United States was unveiled by Harley.
Revealing its ‘Rewire’ strategy earlier in July, it said it would streamline its expected product portfolio by around 30 percent and concentrate on 50 growth-potential markets in North America , Europe and parts of Asia Pacific.
The strategy announcement came after Harley reported an unexpected quarterly loss due to coronavirus pandemic disruptions.
Harley said earlier in the year that it planned to reduce its product selection and exit lower-volume markets, without specifying which markets.
In the regulatory filing, the company announced that 80 percent of the $75 million restructuring costs that Harley expects to incur are expected to be cash expenses, including approximately $ 3 million in one-time termination payments, approximately $ 5 million in non-current asset adjustments and approximately $67 million in contract termination and other costs.
Revenue from motorcycles and related goods dipped 53 percent year-on-year to $669 million, hurt during the quarter by the temporary suspension of production due to lockdowns to curb the spread of the new coronavirus.
In the United States, the main market, retail revenues plummeted 27 percent year-on-year, the steepest decline in at least six years.
Harley-Davidson Inc. (HOG) was amongst the S&P 500 ‘s largest fallers on Wednesday. With 2.68 million shares changing hands, the company suffered a 2.84 percent fall to $23.28.
