Moody’s cuts Harley-Davidson, unit

Moody’s Investors Service said it downgraded the long-term ratings of Harley-Davidson, Inc. and Harley-Davidson Financial Services, Inc. to Baa3 from Baa2.

The downgrades reflect the long-term erosion in the company’s core market for heavy-weight motorcycles in North America. The downgrade also reflects the pressure on Harley-Davidson’s 2020 operating performance due to the pandemic-related shut-down and the restructuring charges associated with the Rewire initiative, Moody’s said.

Rewire is intended to cut operations in unprofitable regions outside the core markets of North America, Europe and parts of the Asia Pacific region, better align production with customer demand and curtail discounting, the agency said.

“Moody’s view these aspects of the plan as essentially reversing the prior strategic plan which called for significant expansion into geographic markets with new products, and they will generate a significant portion of the $250 million in cost savings Harley-Davidson has targeted for 2020. As the Rewire has been implemented quickly, clear benefits should be apparent in the second half of 2020. Moody’s does not expect additional restructuring expenditures beyond this year,” the agency said in a press release.

The outlook is stable.

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