After reviewing in more detail the financial statements filed by Shimano, Inc. following the company’s 2022 earnings report this past week, there is an ominous set of figures and remarks in the company’s outlook for its business in 2023 missed in earlier reporting of the company’s strong 2022 results.
After exceeding its forecast for 2022, Shimano now forecasts a double-digit decline in business in 2023, with much of it coming from its Bicycle Components segment.
The company took a surprisingly cautious and contrarian view on the shape of the global economy, citing everything from the war in Ukraine to inflation in the U.S. as background on the company’s outlook. Japan was the only region it reported a positive economic outlook for the year.
For the full year 2023, Shimano’s sales are expected to decline 20.5 percent to ¥500.0 billion, and operating income is forecasted to contract 37.9 percent to ¥105.0 billion.
Ordinary income is forecasted to decline 32.3 percent to ¥119.5 billion, and net income is expected to decline 32.5 percent to ¥86.5 billion. Basic EPS is forecasted at ¥954.44 per share.
For the 2023 first half, Shimano’s sales are forecasted to decline 16.3 percent to ¥254.2 billion, and operating income is expected to fall 38.6 percent to ¥49.7 billion.
Ordinary income is estimated to decline 39.5 percent to ¥55.7 billion, while the outlook for H1 2023 net income sees a decline of 41.4 percent to ¥40.2 billion. Basic EPS is forecasted at ¥954.44 per share for the first half.
Bicycle Components sales are expected to reach ¥200.0 billion in the first half of 2023 and finish the year at ¥386.6 billion by year-end, compared to ¥517.44 billion in 2022, a decline of more than 25 percent. Bicycle Components revenues increased 16.6 percent in 2022.
Fishing Tackle sales are forecasted to be ¥54.0 billion in the first half and ¥103.5 for the full year, down 6.8 percent from ¥110.99 billion in 2022. Segment revenues rose 8.4 percent in 2022.
Shimano said it is concerned that global supply chains could be disrupted by supply constraints and heightened political tension caused by geopolitical risks that have emerged, such as the prolonged situation in Ukraine, and that high inflation dragging on and tight monetary policies adopted globally could put downward pressure on the economy.
In Europe, the company said there is concern that soaring resources, energy prices and supply constraints might restrain economic activities, and prolonged high inflation could slow economic recovery.
In the U.S., Shimano shared concerns that high inflation and rises in policy rates could put downward pressure on the economy.
In China, it is concerned that economic recovery will slow down due to stagnation in economic activities caused by the spread of COVID-19 and a deterioration in the real estate market.
In Japan, Shimano said it is expected that the economy would pick up due to the normalization of economic activities. Meanwhile, economic downturns overseas and a decline in consumer sentiment caused by rising prices may influence the economy.
In these circumstances, the company said it emphasizes not only striving to develop and manufacture “captivating products” that bring sensations to consumers as a “development-oriented digital manufacturing company” of Japanese origin while closely monitoring trends in demand for bikes and fishing tackle but also moving forward step-by-step as a “value-creating company” that continues to create a shared value between corporations and society.
“We will endeavor to further enhance management efficiency and strive for sustainable corporate growth by pursuing the creation of new cycling and fishing culture,” the company concluded.
Photo courtesy Shimano
