Sales of motorcycles across Europe continue to be strong despite challenges ranging from Brexit to trade tensions to political turmoil, the region's leading bikemaker says.
"I've been totally surprised," said Stefan Pierer, Chief Executive of Austria's KTM Industries AG, whose unit sales grew by 10 per cent last year to 261,000. "Europe has been sensational this year."
Pierer said he had expected concerns such as the Yellow Vest protests in France, Italy's debt burden, and Britain's departure from the EU to cut into sales. But the industry's growth in the region topped 21 per cent in the first quarter, with KTM slightly outpacing rivals at about 22 per cent, he said at the company's headquarters in Mattighofen, Austria. The company says the data reflect robust consumer confidence, as most of its European sales are of bikes ridden for weekend fun rather than commuting.
In North America, dominated by Harley-Davidson, industry sales declined by 4.5 per cent, with KTM posting a drop of 1.1 per cent. April was somewhat softer than March, KTM said.
KTM, which also owns the Husqvarna brand, has doubled its annual unit sales over the past five years. Pierer had predicted revenue growth of one per cent to five per cent this year and next, before new models kick that up to about 10 per cent in 2021. By 2022, Pierer aims to expand unit sales to 4,00,000 and revenue to two billion euros, including KTM bikes sold by Indian partner Bajaj Auto Ltd.
Earnings before interest and taxes will remain between eight per cent and ten per cent of sales, while capital expenditures likely peaked at 184 million euros in 2018 and will fall below 160 million euros annually from 2019 to 2021, he said. Free cash flow will improve as new models are introduce and spending on updated facilities winds down.
KTM's new offerings include a 390 cubic centimeter, single-cylinder enduro bike this year and a touring model with a lightweight two-cylinder engine in 2020. Husqvarna will introduce an 800cc travel enduro for 2021, and Pierer is considering a 1,300cc V2 similar to the KTM Super Duke.
— Bloomberg
