Falling Yen, Rising Asian Sales Boost Shimano’s Third Quarter Results

Shimano’s sales rebounded strongly in the third quarter, although the growth was due primarily to the devaluation of the yen and growth in Asia.

While consolidated net sales grew 12.2 percent to ¥66.4 billion ($671 mm) in the quarter ended Sept. 30, the Japanese company said U.S. sales of its bicycling components and fishing tackle remained lackluster and that a resurgence of spending by European bicyclists would not make up for sales lost to a cold, wet spring.

At the company’s Bicycle Segment, sales increased 10.1 percent to ¥52.1 billion ($537 mm). Sales were strong in Europe in July and August, but remained lackluster in Japan and the United States. Even in Europe, the gains were not enough to offset the effects of a late spring. Sales were buoyed by growing sales of sport bikes in China and after-market demand for components was strong across all markets. Shipments of the company’s Deore and Altus mountain bike components and Ultegra and Claris road bike components are proceeding as scheduled.

At the Fishing Tackle segment, sales increased 21.7 percent to ¥13.2 billion ($134 mm) and operating income grew 74.8 percent to ¥1.1 billion ($10.6 mm). Sales rebounded in Japan, but remained lackluster in Europe and North America. Sales to China and Southeast Asia drove growth.

For the first nine months of 2013, Shimano sales reached ¥199.5 billion ($2.1 bn), up 9.2 percent from the same period in 2012. Bicycle component sales grew 8.9 percent to ¥159.2 billion ($1.7 bn), while fishing tackle sales were up 10.6 percent to ¥40.0 billion ($415 mm). 

While Shimano did not provide results in local currency terms, it reported foreign currency adjustments had a ¥13.0 billion ($132 mm) positive impact on its income for the nine months ended Sept. 30, compared with just ¥2.4 billion ($22.7 mm) in the same period of 2012. The yen depreciated roughly 21 against the dollar and 24 percent against the euro in the year ended Sept. 30 as the new administration of Prime Minister Shinzō Abe pumped money into the economy.

“In Japan, Abenomics gradually started to take effect and economic sentiment improved for the third consecutive quarter,” Shimano noted in its earnings release. “Personal consumption also trended upward buoyed by improving consumer confidence reflecting an upturn in real wages.”

In the United States, by contrast, Shimano warned that the budget impasse could impede private sector growth in the fourth quarter. In Europe, the company said the downward trend continued with some national economies still contracting.

Nevertheless, Shimano upped its revenue forecast for fiscal 2013 by 1.9 percent to ¥265 billion and its ordinary income forecast by 2.1 percent to ¥47 billion and affirmed its previous guidance of operating income of ¥43 billion and net income of ¥31 billion.