Blaming weak economies in many regions of the world, Shimano Inc. reported earnings and sales declined in the first half and lowered its earnings guidance for the full year.
Sales in the half ended June 30 dipped 2.0 percent to ¥163.0 billion ($1.45 bn). Operating earnings slid 9.8 percent to ¥30.8 billion ($275 mm) while net income declined 18.3 percent to ¥18.7 billion ($167 mm).
Operating earnings were slightly better than Shimano’s forecast of ¥30.4 billion but below its guidance for net earnings of ¥19.4 billion. Revenues were forecast to arrive at ¥162.6 billion.
“In the U.S., while the trend of policies of the Trump administration attracted attention, moderate economic expansion continued, driven by the growth of personal consumption thanks to the improvement in the labor market,” Shimano said in its quarterly statement.
In other key regions, Shimano noted that many European economies “were on a recovery trajectory” with spending picking up. While its home market of Japan appears also to be heading for an uptick, “a full-fledged recovery did not materialize due to concerns about uncertain political and economic prospects overseas.”
In its Bicycle Components segments, sales decreased 2.7 percent from the same period of the previous year to ¥129.1 billion ($1.15 bn), and operating income decreased 11.5 percent to ¥27.1 billion ($242 mm).
Shimano noted that in North America, retail sales of completed bicycles were approximately the same as the previous year’s level and distributor inventories remained somewhat low. In Europe, retail sales of completed bicycles were at the expected level for a typical first half.
China is being impacted by the sharp growth in bike sharing and retail sales of completed bicycles have been “lackluster” in the country since 2015. Southeast Asia and South America were flat while retail sales of both sports bicycles and community bicycles in Japan were described as “lackluster.”
On the positive side, both the Deere mountain bike components released in May 2017 and the Ultegra road bike components released in June 2017 were well received in the market.
In the Fishing Tackle segment, sales increased 0.6 percent to ¥33.8 billion ($302 mm), and operating income increased 4.7 percent to ¥3.8 billion ($34 mm). Said Shimano about the segment’s performance, “While North America had generally good weather, consumer sentiment was rather weak.”
In other regions, results in the Fishing Tackle in both Southeast Asia and Taiwan were impacted affected by slowing economic activity, while China and South Korea continued to see “robust” growth. Japan was essentially flat although sales of lure-related products were described as “buoyant.”
For the full year, Shimano continues to expect revenues of ¥330 billion, up 2.2 percent. Operating earnings are now expected to reach ¥63 billion, down 2.4 percent and net income is expected to drop 17.4 percent to ¥42.1 billion. Under its former forecast, operating earnings were expected to be ¥66 billion, ahead 2.3 percent, and net income at ¥44 billion, down 13.7 percent.
Photo courtesy Shimano