Shimano Corp. said the depreciation of the yen and a looming Japanese consumption tax drove double-digit sales increases in both its bicycling and fishing segments in the first quarter by 2.5 percent.
The Japanese company reported net sales increased 19.6 percent to ¥75.7 billion ($737mm) in the first quarter ended March 31 compared with the first quarter of 2013. Operating income increased 45.8 percent to ¥14.2 billion ($138mm), ordinary income increased 24.8 percent to ¥13.8 billion ($134mm), and net income increased 30.4 percent to ¥10.0 billion ($97 mm).
Sales at Shimano’s Bicycle Components segment increased 19.4 percent from the same period of the previous year to ¥61.0 billion, ($594mm) and operating income increased 40.5 percent to ¥13.3 billion ($130mm). Sales of the company’s bicycle components, which are sold to OEMs and directly to consumers in the aftermarket, were buoyant in Europe during the quarter thanks to generally mild winter weather. That helped offset the effects of the harsh winter in the United States, where retail sales were delayed. In Japan, in spite of a severe winter, retail sales of sports bicycles and mid-range and high-grade commuting bicycles were robust, partly owing to a spike in last-minute demand before the April 1 implementation of a consumption tax. Sales of sports bicycles continued to grow strongly in China and growth in other emerging markets was also robust.
Shimano reported distributor and retailer inventories were in an appropriate range in all regions and that order-taking was brisk thanks to a depreciation of the yen that made Shimano products more affordable. Segment sales for the first quarter exceeded the forecast and prompted the company to up its revenue forecast for the year.
At Shimano’s Fishing Tackle segment sales increased 20.6 percent from the same period of the previous year to ¥14.6 billion ($142mm), and operating income increased 187.8 percent to ¥892 million ($9mm). Sales in the Japanese market got off to a smooth start thanks to stable weather from the New Year onward and longer-than-usual holidays. In February, the Japanese market lost some momentum, affected by record-breaking heavy snowfalls centering on the parts of the country facing the Pacific for two consecutive weeks and low temperatures. However, Shimano exceeded the previous year’s sales as consumers loaded up on high-grade products before the tax increase, including the New Stella salt water reels launched in March. Sales to retailers in Europe and North America and Oceania remained brisk.
Shimano said its remained cautious about the balance of the year given the yen’s inevitable stabilization, events in the Ukraine and the impact of quantitative easing by the U.S. Federal Research on both the U.S. and emerging economies. Still, the company upped its forecast of consolidated business performance announced on Feb. 5, 2014.
Shimano now expects net sales of ¥287 billion (+5.9 percent), operating income of ¥48 billion (+14.9 percent), ordinary income of ¥47.5 billion (+0.1 percent) and net income of ¥33.5 billion (+4.5 percent) for the full year. The company also issued guidance for the first half that calls for sales of ¥145.2 billion (+9.1 percent), operating income of ¥25.1 billion (+18.2 percent), ordinary income ¥24.6 billion(-0.3 percent) and net income of ¥17.4 billion (-2.2 percent).
