April 24, 2018 / 11:21 AM / 10 months ago

UPDATE 3-Harley-Davidson backs forecast, investors see signs of recovery

* Q1 profit, rev top estimates

* Sees 2018 shipments of between 231,000 and 236,000 units

* Shares rise as much as 5 pct (Adds details from conference call, updates shares)

By Arunima Banerjee

April 24 (Reuters) - Harley-Davidson Inc stood by its full-year shipments forecast and said it expects dealers to sell more motorcycles in overseas markets, offering a glimmer of hope to a business struggling with an aging customer base in the United States.

The company's shares rose about 3.6 percent on Tuesday as investors looked past a further 7 percent decline in overall retail sales.

Harley, which commands about half of the U.S. big-bike market, has seen its U.S. market share erode in the past few years as buyers opt for heavily discounted bikes from rivals.

"A lot of investors were expecting a guidance (2018 shipments) to be lowered, that didn't happen," Northcoast Research analyst Seth Woolf said.

To revive demand, Harley is spending aggressively on product development and marketing, including promoting its learn-to-ride academies at showrooms and developing electric motorcycle technology.

"There is more marketing and sales support queued up to deliver our spring sales goals," Chief Executive Officer Matt Levatich said, adding that its two new bikes launched this year were well received by dealers and customers.

Total shipments - motorcycles shipped to dealers - fell 9.7 percent. For the second quarter, it expects to ship about 67,500 to 72,500 motorcycles, down from 81,807 units a year earlier. For the full year, it reiterated shipments of between 231,000 and 236,000 units.

International sales rose 0.2 percent - after five straight quarters of declines.

Harley, which has already been pressured by higher steel and aluminum prices, said prices have risen further since U.S. President Donald Trump moved to impose tariffs on imported steel and aluminum.

The tariffs, which have not hurt Harley's sales yet, could potentially place the company in the middle of a trade war, with the European Commission threatening to slap duties on Harley's motorcycles. Harley said it was working with trade groups and various trade officials in both countries.

"We enter this year with full awareness of the headwinds we face, and we are making progress against our plans to address challenges," Levatich said.

The Milwaukee, Wisconsin-based company's profit fell 6.2 percent to $174.8 million, or $1.03 per share, in quarter ended April 1, but topped estimate of 90 cents, according to Thomson Reuters I/B/E/S.

Revenue from motorcycles and related products rose 2.7 percent to $1.36 billion, beating estimate of $1.23 billion.

"1Q18 appears to be when HOG finally got expectations low enough to not miss," Morgan Stanley Carmen Hundley said. (Reporting by Arunima Banerjee in Bengaluru Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)

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