Harley-Davidson on comeback road

VETERAN motorcycle maker Harley-Davidson has roared back into investors' sights after defying Japanese superbikes, a flirtation with bankruptcy and now the sluggish American economy.

The glory days for Harley appear to be back, with its growing appeal beyond Hell's Angels - it is attracting devotees among Air Force generals and Wall Street gurus alike - fuelling a sharp pick-up in recent trading.

After a slip in sales attributed to harsh weather at the start of the year, second-quarter earnings are up a whopping 40% to $202m (£127m) from a year ago.

Sales of its motorcycles with the famous winged logo accelerated far beyond analysts' expectations. The profit surge vindicated value investor and Wall Street guru Bill Nygren's recent acquisition of a block of Harley shares, the only major addition to his Oakmark Fund's portfolio during the second quarter.

Nygren's interest was sparked because Harley's shares had decelerated, losing about 10% between January and June, as analysts questioned whether the company could continue to post 20-plus annual growth in a down economy.

Nygren said that, at 15 times 2004 earnings estimates, Harley 'is being treated like a below-average business'.

Yesterday it proved, once again, it is not an average business. Its popularity with a wide swathe of American men pushed sales up to $1.22bn, from $1bn a year ago. Strong demand for machines such as the Fat Boy and Road King increased waiting lists for the popular muscle machines.

Harley, which came back from the brink of bankruptcy in 1985, has since been a textbook-case of a successful turnaround, consistently outperforming expectations.

Its bikes remain favourites with baby-boomers, including Air Force General Richard Myers, chairman of the Joint Chiefs of Staff and a confidant of President George Bush. The lanky 61-year-old rides a Harley in his spare time away from the Pentagon.

The Milwaukee company, entering its second century of designing and manufacturing cruising bikes, said it is raising 2003 production targets to nearly 300,000 units after the strong second quarter. The shares popped up nearly 5% yesterday in active trading following the earnings announcement.

Earlier this year, Harley was forced to offer incentives to shift some of its bikes, including the $18,0000 V-Rod dragster. Several analysts questioned whether it could continue its string of impressive earnings - 14 of the past 17 years it recorded 20%-plus growth - in such a weak economic environment.

Family born to be wild

THE company remains closely tied to the family of founder William Davidson.

Grandson Willie Davidson, widely known as Willie G, is vice president in charge of styling for the 100-year-old motorcycle maker, a position he has held since 1978.

He has been instrumental in the design of every motorcycle Harley has produced since the 1960s, and is credited as the brain behind the classic Super Glide model.

All three of Willie G's children are involved in design and product development.

Daughter Karen oversees the design and licensing of Harley's MotorClothes line.