A strong yen and Japans earthquake and subsequent nuclear crisis caused earnings to plunge at Shimano in the companys fiscal first half ended June 30.
First half net income fell 28.2 percent in Japanese yen terms to ¥6.9 billion ($84 mm), as operating income sank 11.8 percent to ¥15.2 billion ($186 mm). Companywide gross margins slipped 220 basis points to 35.6 percent of sales, while SG&A reached 21.4 percent of sales, up 10 basis points from the year-ago H1 period.
Consolidated net sales rose 2.6 percent for the half to ¥107.1 billion ($1.31 bn) at the Japanese maker of bicycle components and fishing tackle.
Shimano said sales and profits were undermined when the Japanese economy did not rebound as expected, partly due to the strength of the yen and partly due to the March earthquake dampening domestic sales.
Bicycle Components segment sales increased 3.3 percent to ¥84.3 billion ($1.03 bn) for the first half. Distributors inventory remained at normal levels worldwide and shipments by Shimano proceeded more or less at plan. Sales of Deore XT mountain bike components and Tiagra road bike components and other new products were brisk throughout the six months ended June 30. Warm weather boosted retail sales in Europe from March through May, while colder-than-normal weather stunted U.S. retail sales.
Sales at Shimanos Fishing Tackle segment rose 1.3 percent to ¥22.6 billion ($275 mm). Though the earthquake and resulting nuclear crisis decimated fishing on the Pacific side of Japan, Shimano was able to maintain tackle sales at prior year levels through sales of its Scorpion DC double axis bait-cashing reels for bass fishing and its Poison Glorious series of rods. Strong demand in Asia and Latin America increased sales overseas.
