Giant Inc. said a glut of some high-end bicycles in the United States and weak demand in China resulted in lower first quarter sales and profits and are likely to result in flat sales in 2016.

“Considering soft global economy, fluctuation in foreign exchange, high inventory levels and weak domestic demand in China, 2016 will be a challenging year,” the Taiwanese bicycle manufacturer said.

Giant reported consolidated group revenue, which also reflects its OEMs sales, slipped 1.4 percent to NT$14.35 billion compared to NT$14.58 billion in the first quarter of 2015. Net income before taxes was NT$1.08 billion, down 9.1 percent from NT$1.19 billion. Net income after taxes reached NT$855 million, a decrease of 9.8 percent from 2015’s NT$947 million, EPS at NT$2.28.

Giant’s own brands achieved satisfactory sales growth in Europe, Canada and Australia. However, U.S. sales of its Giant and Liv bikes were flat compared to same period of 2015 due to the current high inventory level within the overall bicycle market. In China, sales came in below target due a “weak domestic market.”

Giant projects total sales for the group in 2016 will remain flattish as e-bike sales to Germany, France and The Netherlands, offset lower sales in the United States and China.

While saying its U.S. inventory levels are more favorable than its competitors, Giant expects relatively high bicycle inventories to hurt its U.S. sales performance in 2016. It also expects the market correction to continue in China.

Giant’s 2015 net profit after tax was NT$3.84billion, EPS NT$10.25. The company’s shareholders will vote at their annual shareholder meeting June 22 on a proposed dividend payout of NT$6.20 per share.