Harley-Davidson sells $5 bln loan portfolio; tariff headwinds persist

By Nathan Gomes

July 30 (Reuters) - Harley-Davidson's HOG.N shares jumped more than 20% on Wednesday after it announced a sale of loans worth over $5 billion to KKR.N and PIMCO, as the company looks to reduce its debt pile while navigating headwinds from tariffs and slowing demand.

The motorcycle maker, however, reported quarterly profit below estimates and withheld annual forecasts due to tariffs, noting a $17 million hit during the first half of the year.

"Despite the EPS miss, shares traded higher pre-market as investors focused on the positive transaction aspects. In our view, while the deal is a positive, HOG faces major headwinds," CFRA Research analyst Garrett Nelson said.

Harley plans to reduce its debt by $450 million with the deal, while retaining full control and majority ownership of its financial arm.

The deal, which is expected to close in the second half of the year, will likely generate $1.25 billion in cash, the company added.

Leisure vehicle demand has been on a decline in the U.S., with consumers rethinking non-essential purchases in an uncertain economy. Harley has also struggled to win over younger riders, who prefer fuel efficient models with modern safety features.

On Wednesday, the legacy motorcycle maker confirmed the launch of its small and "Sprint" model, aimed at U.S. and international markets with a targeted entry price below $6000.

Between February and now, close to 100 U.S. companies have either withdrawn or cut their guidance as uncertainty over tariffs throws financial planning out of gear, with most of them from the consumer and automotive and transportation sectors, according to Reuters calculations.

Rival Polaris PII.N, which owns the "Indian" brand of motorcycles, also held back its full-year guidance.

In May, the company said it was evaluating an investment for its financial arm.

Harley-Davidson's profit fell to $108 million, or 88 cents per share, in the second quarter from $218 million, or $1.63 per share, a year earlier.

Analysts on average had expected a profit of 96 cents per share, according to data compiled by LSEG.