DOW JONES NEWSWIRES
Harley-Davidson Inc. (HOG) slashed its quarterly dividend by
70%, to 10 cents a share, as the motorcycle manufacturer looks for
additional ways to save cash while it grapples with slumping demand
and woes at its financial-services unit.
The dividend cut, which will save the company about $200 million
a year, comes on top of Harley-Davidson's plan announced last month
to cut about 1,100 jobs, or 11% of its work force, over the next
two years in response falling profits as consumers cut back on
their discretionary spending, especially of big-ticket items.
Credit-market woes have also hurt Harley-Davidson's
financial-services unit, which helps consumers finance their
motorcycles and independent dealers their inventory. For 2009,
Harley-Davidson has estimated the financing unit has about $1.5
billion in net cash-flow needs, which it had said it hopes to fund
through a combination of unsecured debt and asset-backed
securitization.
Harley-Davidson, like many other manufacturers, relies heavily
on its in-house financing unit to close sales. In an effort to
contend with rising delinquencies, the financial unit, which
provides loans for more than half of all Harleys sold, recently
raised costs on its consumer loans as much as one percentage
point.
Harley-Davidson's first-quarter dividend is payable March 19 to
shareholders of record March. The fourth-quarter payment was 33
cents.
Shares fell 5.4% to $12.70 in recent trading amid a broad market
downturn and are off 70% since September.
-By Lauren Pollock, Dow Jones Newswires; 201-938-5964;
lauren.pollock@dowjones.com