Harley-Davidson 3-month NYSE chart

Harley-Davidson Inc. has reported a sharp drop in second-quarter profit as a weak economy, record gasoline prices and lower consumer confidence continued to hobble the iconic motorcycle maker's sales.

But the Milwaukee-based company stood by its outlook for the year, and its earnings beat Wall Street's expectations.

Harley said Thursday its earnings for the quarter ended June 29 fell 23 per cent from a year ago to $222.8 million US or 95 cents per share, down from $290.5 million, or $1.14 per share.

Revenue dropped nearly three per cent to $1.57 billion from $1.62 billion.

Analysts polled by Thomson Financial expected earnings of 76 cents per share on $1.4 billion in revenue, on average.

Harley said shipments of its motorcycles to dealers and distributors declined more than 15 per cent to 80,326. Last quarter, the company said it would cut shipments by the thousands and trim its workforce in response to economic sluggishness.

"We expect U.S. economic conditions and ongoing consumer concerns to continue to create challenges at least through the end of the year," chief executive Jim Ziemer said in a statement.

"We believe the actions we took to reduce shipments to our U.S. dealers and our related workforce reduction position us appropriately for the current economic environment."

Retail sales fell 3.6 per cent from the year-ago quarter, but international sales grew, reflecting Harley's increased focus overseas.

Harley said sales in its international markets jumped 11.2 per cent, led by a 67 per cent gain in Latin America.

Last week, Harley announced the purchase of Italian motorcycle maker MV Agusta Group for about $109 million as part of an effort to expand in Europe.

Harley maintained its full-year profit outlook of between $3 and $3.18 per share.