Shimano Group experienced a very strong business turnaround in 2010 after a tough 2009. But the company still remains cautious about the business moving into 2011 over concerns that the tempo of the economic recovery may slow in the European economies, the U.S. and other advanced countries, undermined by a credit crunch and high unemployment.
The Japanese bicycle component and fishing tackle manufacturer believes their domestic economy is expected to continue on a modest recovery track but is expected to remain unpredictable as “personal consumption is likely to weaken once the impact of the government’s policies wears off and a persisting strong yen will hamper export competitiveness.” Still, the company expects that China, India and other emerging economies are expected to continue to enjoy robust growth.
Full year revenues increased 14.4% to ¥213.6 billion ($2.44 bn) for the year ended Dec. 31 from ¥186.7 billion ($2.00 bn) in 2009, roughly double the forecasted growth one year ago. Operating income jumped 59.6% to ¥32.8 billion ($374 mm) from ¥20.5 billion ($219 mm) in the prior year. Net income doubled to ¥18.4 billion ($218 mm) compared to ¥9.6 billion ($103 mm) in 2009.
The company said an adjustment of the bicycle inventory worldwide that began in 2009 was completed by early fiscal year 2010 and distribution inventories resumed normal levels during the balance of the year. Shimano reported that, despite the impact of the strong yen, severe winter weather and a stalled economic recovery affecting several European countries, and the negative impact on consumer sentiment in the U.S. of the Deepwater Horizon oil spill in the Gulf of Mexico, sales outside Japan exceeded the previous year’s level, with the increase being “particularly marked” in Asia.
Shimano Group is forecasting net sales of ¥220 billion in 2011, an increase of 3.0% over the final results for 2010. Net income is expected to increase 15.1% in 2011 to ¥22 billion.
For the fourth quarter, total revenues increased 10.2% to ¥57.7 billion ($700 mm) and net income jumped 178% to ¥4.7 billion ($57 mm) for the period.
The company reported that fourth quarter sales of Bicycle Components rose 10.6% to ¥46.3 billion ($561 mm) for the year, resulting in an 8.4% decline in operating income to ¥7.06 billion ($86 mm). In Fishing Tackle, sales jumped 31.5% to ¥13.3 billion ($161 mm), while operating come fell 45.0% to ¥252 million ($3 mm) for the quarter.
Fourth quarter Japan domestic revenues increased 10.4% to ¥39.5 billion ($479 mm). Sales in North America rose 6.2% to ¥5.74 billion ($70 mm) and Asia revenues jumped 38.2% to ¥5.82 billion ($71 mm), while Europe revenues declined 6.4% to ¥5.29 billion ($64 mm) for the period.
Operating income contracted 0.3% to ¥3.69 billion ($45 mm) in Japan in the fourth quarter and fell 92.4% to ¥48 million ($582,000) in Europe. On the plus side, North America operating income jumped 220% to ¥435 million ($5.3 million) and Asia operating income increased 28.1% to ¥2.82 billion ($34 mm) in the period.
Overall fourth quarter gross margins narrowed 50 basis points to 32.8% of sales, while SG&A increased 10 basis points to 20.3% of sales.
Inventories at year-end were up 5.2% to ¥18.4 billion ($226 mm).
