Harley-Davidson experienced a significant surge in shares, marking the largest increase in five months, after reporting better-than-expected profits and revenue for the second quarter. This positive outcome indicates that CEO Jochen Zeitz's turnaround strategy is successfully helping the motorcycle manufacturer overcome supply-chain challenges and a temporary production shutdown.

The Milwaukee-based company posted earnings of $1.46 per share, surpassing analysts' average estimate of $1.02, as compiled by Bloomberg. Revenue from motorcycles and related products reached $1.27 billion, exceeding the projected $1.25 billion forecast by analysts. Harley's shares rose 6.7% in New York trading, with an earlier peak of 10%, the highest intraday gain since early February.

Since assuming leadership in February 2020, Jochen Zeitz, a former Puma SE executive, has implemented cost-cutting measures, exited unprofitable markets, and streamlined inventory as part of his comprehensive "Hardwire" turnaround plan. By introducing new models and addressing excess bike inventory, Zeitz has successfully stabilized the company. However, sales growth has been hampered by shipping bottlenecks and parts shortages following the pandemic.

Remarkably, Harley-Davidson's profit surpassed expectations despite a global motorcycle sales decline of 23%, reaching 50,500 units in the second quarter. Sales in North America, the company's largest market, declined by 28% to 34,900 units. Europe experienced a 15% decrease, Latin America saw an 8% drop, while sales in Asia increased by approximately 1%.

During an analyst call, Zeitz acknowledged the strong demand for motorcycles but expressed concerns about the limited availability of bikes in dealerships. Harley struggled to meet the shipping demands to dealers due to various challenges.

In May and June, Harley-Davidson faced a temporary production halt and shipment suspension for two weeks due to a "regulatory compliance matter" involving a part from one of its suppliers. However, the company reassured investors that it would compensate for the lost production in the second half of 2022.

Zeitz has also been actively reducing the number of dealerships in the United States and reclaiming a portion of dealer profits on specific models. This strategic move is expected to improve profit margins, according to UBS AG analysts.

Harley-Davidson maintains its forecast of 5% to 10% revenue growth in 2022, along with an operating income margin of 11% to 12%.