Shimano Corp. reported the weak yen enabled its Bicycle Components segment to beat its own forecasts in the first half ended June 30, but lowered its full year forecast for operating income.

The Japanese company reported net sales increased 25.8 percent  to ¥196.6 billion ($1.6 bn) in the first half of the year ended June 30 compared with the first half of 2014. That beat guidance of ¥193.7 billion Shimano issued in April, which was up from the ¥180.7 billion it forecast in February.

Operating income increased by ¥15.0 billion, or 49.2 percent to ¥45.4 billion ($377 mm), including ¥3.67 billion in foreign currency gains. Ordinary income increased 70.6 percent to ¥49.7 billion ($413 mm), and net income increased 75.8 percent to ¥36.5 billion ($303 mm).

Bicycle Components
At Shimano's Bicycle Components segment, net sales increased 29.7 percent from the same period of the previous year to ¥163.0 billion ($1.35 bn), and operating income increased 51.8 percent to ¥42.8 billion ($355 mm).

Europe and North America experienced virtually no decline in demand despite somewhat unsettled weather during the first half. Retail sales in the first half were brisk, leaving distributor inventories in Europe at the appropriate level and those in the U.S. were slightly lower than the appropriate level.

In Japan retail sales of sports bicycles continued to be robust, while retail sales of community bicycles were weakened by the impact of price increases caused by the depreciation of the yen, and distributor inventories of community bicycles remained somewhat high.

While sales of sports bicycles in emerging markets maintained robust growth, retail sales of sports bicycles in China, which had been the leading driver of demand for sports bicycles, in the first half decreased from the level seen during the first half of 2014. However, distributor inventories of sports bicycles in China remained in the appropriate range.

In these market conditions, full model changes of Deore XT and Acera mountain bike components and Tiagra road bike components were well received and order-taking was brisk. In addition, Shimano products remained relatively affordable because of the entrenched depreciation of the yen. Thus, segment sales for the first half exceeded the forecast.

Fishing Tackle segment
At the Fishing Tackle segment,  net sales increased 9.8 percent from the same period of the previous year to ¥33.4 billion ($277 mm), and operating income increased 19.2 percent to ¥2.67 billion ($22 mm).

The Japanese market got off to a sluggish start partly due to weather factors such as snow falls from the New Year onward, and demand during the first three months of the year was below the demand in the same period of the previous year before the consumption tax increase. Then, in Golden Week, the market started to move forward thanks to good weather and sales from April onward exceeded the previous year’s level. However, sales during the first half were slightly lower than the previous year because of lackluster consumer spending.

Overseas, sales in North America, Western Europe, and Oceania including New Zealand were generally robust, because of relatively stable weather and pre-orders received.

Guidance updates
As of the end of the first half of fiscal year 2015, cash and cash equivalents amounted to ¥171.9 billion, an increase of ¥18.9 billion compared with the figure as of the previous fiscal year-end. Inventory was valued at ¥68.2 billion, down from ¥69.2 billion a year earlier.

Shimano revised its forecast of consolidated business performance for the full fiscal year up from its April 28 guidance. It now expects net sales of ¥360.0 billion, operating income of ¥77.0 billion, ordinary income of ¥81.3 billion and net income of ¥59.5 billion. The previous forecast called for net sales of ¥357 billion, operating income of ¥76.5 billion and net income of ¥59.0 billion