Shimano shares jumped 10.3%, the second highest increase on the Osaka Securities Exchange following the release of the company’s annual report. The company said sales climbed 6.6% from ¥134.7 billion ($1.1 billion) last year to ¥143.6 billion ($1.3 billion) in fiscal 2003. Gross margin as a percentage of sales fell 50 basis points, from 34.1% in fiscal 2002 down to 33.6% this year.

In spite of the declining margins, Shimano’s net income grew 51.9% from ¥8.1 billion ($64.5 million) to ¥12.2 billion ($114.3 million), and basic EPS grew 61.4% to ¥97.16 (91¢). 2004 projections show this upward trend continuing. Shimano expects sales of around ¥150 billion ($1.3 billion), an increase of 5%. Net profit should come in at ¥14.6 billion ($126 million), an increase of 19%.

BOSS Reported earlier in the year that Shimano’s Bike division sales are the main force behind the sales increase, jumping 12.4% for the year while fishing declined 6.6% and all other product sales dropped 10.6%.

Exports and overseas sales continue to grow for the Japanese company. The bicycle division derived 94% of its sales from outside of Japan, while fishing sold 53% overseas, and 82% of total net sales came from foreign customers.

BOSS spoke with Shimano America’s VP of bicycle components, Penina Bush, who said that demand has been so high in her division that the real issue has been delivery. To help alleviate the delivery problems, Shimano has expanded their Czech Republic factory, and will begin production of bicycle components in a new factory in China in the fall of 2004.

Road components are continuing their strong performance, while MTB is slowing, according to Bush. The emerging market for comfort/hybrid is taking off in the EU with high-end comfort component groups, but Bush said, “Our U.S. OEM’s usually use bits and pieces from existing component groups to equip their comfort bikes. It is really a difficult market to define with fitness bikes, comfort bikes and hybrids all lumped together.”