Despite a difficult year for the bicycling industry Shimano Group reported strong revenue growth in the fourth quarter and for all of 2013 thanks to currency gains, strong sales of replacement parts for bicycles and growing demand for its sport bikes in China.
The Japanese company reported net sales reached ¥71.5 billion ($880 mm) in the quarter ended Dec. 31, up 13.4 percent from a year earlier as the favorable trends more than offset the lingering effects of a cold, wet spring in Europe, North America and Japan.
Consolidated gross margins were 33.8, up 40 basis points (bps) from the fourth quarter of 2012. SG&A expenses as a percentage of revenues inched up 30 bps to 19.3 percent and operating income reached ¥10.1 billion ($125 mm), or 14.2 percent of revenues, down 60 bps.
Sales at the Bicycle Components business increased 11.8 percent to ¥58.1 billion ($714mm). While distributor inventories of finished bicycles remained somewhat high in Europe and North America, strong growth in demand for repair parts and the devaluation of the yen enabled the segment to hit its revenue targets for the year. Operating income rose 13.0 percent to ¥10.34 billion ($128mm), or 17.9 percent of revenues, up 20 bps.
In the Fish Tackle segment, sales rose 20.9 percent to ¥13.4 billion ($164mm), while operating income more than quadrupled to ¥361 million ($4mm), or 2.7 percent of revenues, up about 200 bps. Sales were less affected by poor weather thanks to successful product introductions such as new saltwater reels from Stella.
For the full year, Shimano’s North American sales grew 12.8 percent to ¥33.2 billion ($409mm), or about 12 percent of revenue. FY 2013 sales rose 6.7 percent in Japan, 10.3 percent in Europe and 11.5 percent in the rest of Asia. Those three regions accounted for roughly 12, 34 and 37 percent of revenues during the year. Shimano earned about 77 percent of its revenue from selling bicycle components overseas, primarily to bicycle manufacturers in Taiwan and China.
The company boosted spending on both salaries and wages and advertising in 2013 by nearly 15 percent and on R&D by roughly 8 percent over 2012 levels. Shimano ended the quarter with ¥125.9 billion ($1.30 bn) in cash and cash equivalents and ¥28.3 billion in merchandise and finished goods, up 32.8 and 10.5 percent respectively from a year earlier.
Shimano forecasts net sales will grow 3.3 percent to ¥280.0 billion in 2014, while operating income will rise 7.7 percent to ¥45.0 billion. Ordinary and net income is expected to decline 5.4 and 10.2 percent respectively. The forecast includes projected sales of ¥224 billion at Bicycle Components and ¥55 billion at Fishing Tackle.
