Asics Corp. reported operating earnings in the year were down modestly primarily due to foreign exchange losses. A double-digit drop in the U.S. and the strong yen led to a decline in revenues.
In the fiscal year ended December 31, 2016, consolidated net sales decreased 6.9 percent to ¥399.1 billion ($3.54 bn). Domestic net sales increased 0.3 percent to ¥101.6 billion ($901.3 mm), mainly due to strong sales of running shoes, Onitsuka Tiger shoes and Asics Tiger shoes, despite weak sales of sportswear. Overseas sales decreased 9.1 percent to ¥297.5 billion ($2.64 bn), due to weak sales in the U.S. and the effect of the strong yen, despite strong sales of running shoes in East Asia and Oceania/Southeast, South Asia and steady sales in Europe. Sales of Onitsuka Tiger shoes were solid, especially in East Asia. Moreover, Asics Tiger shoes also performed favorably mainly in the European region.
Gross profit decreased 3.1 percent to ¥176.5 billion ($1.57 bn) due partly to the effect of the foreign exchange rates. Selling, general and administrative expenses decreased 2.3 percent to ¥151.1 billion ($1.34 bn) mainly due to a decrease in advertising expenses and the effect of foreign exchange rates. As a result, operating income decreased 7.2 percent to ¥25.5 billion ($226.4 mm), but ordinary income increased 3.9 percent to ¥23.4 billion ($207.7 mm) mainly due to a decrease in exchange loss. Profit attributable to owners of parent increased 52.1 percent to ¥15.6 billion ($138.5 mm) mainly due to a temporary loss caused by the structural reforms to the domestic business, which was posted in the corresponding period of the previous fiscal year.
Business results by reportable segments were as follows.
Japanese region: Net sales decreased 2.3 percent to ¥120.0 billion ($1.06 bn), due to the decrease in intermediary trade which is conducted internally, despite strong sales of running shoes, Onitsuka Tiger shoes and Asics Tiger shoes. As part of structural reforms to the domestic business, the Group promoted minimizing and withdrawing the lower profitable products and a lean organization structure. As a result, segment income increased 174.2 percent to ¥6.43 billion ($57.1 mm).
American region: Sales decreased 17.0 percent (a decrease of 9.0 percent using the previous fiscal year’s foreign exchange rate) to ¥112.9 billion ($1.0 bn), due to the effect of changes in the retail market and intensifying competition in the U.S., in addition to the effect of foreign exchange rates. Segment income decreased 42.5 percent (a decrease of 36.3 percent using the previous fiscal year’s foreign exchange rate) to ¥862 million ($7.6 mm), despite efforts to reduce advertising expenses and other expenses.
European region: Sales decreased 7.3 percent (an increase of 2.8 percent using the previous fiscal year’s foreign exchange rate) to ¥107.6 billion ($954.6 mm), due to the effect of foreign exchange rates, despite continuing steady sales of running shoes and the strong sales of Asics Tiger shoes. Segment income increased 3.4 percent (an increase of 14.6 percent using the previous fiscal year’s foreign exchange rate) to ¥11.3 billion ($100.2 mm) mainly due to an improved gross profit margin.
Oceanian/Southeast and South Asian regions: Sales increased 7.0 percent (an increase of 19.2 percent using the previous fiscal year’s foreign exchange rate) to ¥24.0 billion ($212.9 mm), due to the continuing strong sales of running shoes. Segment income increased 1.6 percent (an increase of 13.1 percent using the previous fiscal year’s foreign exchange rate) to ¥3.6 billion ($31.9 mm) due to the effect of increased sales.
East Asian region: Sales increased 3.6 percent (an increase of 18.4 percent using the previous fiscal year’s foreign exchange rate) to ¥43.5 billion ($385.9 mm), due to the continuing strong sales of running shoes, Onitsuka Tiger shoes, and others, particularly at the subsidiary in China. Segment income increased 7.6 percent (an increase of 24.2 percent using the previous fiscal year’s foreign exchange rate) to ¥5.0 billion ($44.4 mm) due to the effect of increased sales.
Other business: Sales decreased 18.0 percent (a decrease of 8.3 percent using the previous fiscal year’s foreign exchange rate) to ¥9.2 billion ($81.6 mm), due to some weaker performances such as outdoor wear under the HAGLÖFS brand and the effect of foreign exchange rates, despite strong sales of outdoor shoes under the HAGLÖFS brand. Segment loss was ¥421 million ($3.7 mm).
Imagery courtesy Asics
