Shimano Rode Resurgent Bike Market, Weak Yen in 2014

Shimano Corp. of Japan reported net sales increased 22.2 percent in 2014 thanks to a resurgent bicycle business, while profits grew twice as fast thanks to a weak yen.

Sales reached ¥333.2 billion ($3.15 bn), up 22.9 percent from 2013, while operating income surged 57.5 percent to ¥63.5 billion ($603 mm). In U.S. dollar terms, sales were flat in the United States, but rose 20 percent in Europe and 18 percent in Asia, where Shimano makes most of its OEM sales to bike manufacturers.

Operating margin reached 19.9 percent, up 450 basis points from 2013, as the ascendant renminbi and euro turbocharged profits. Net income grew 46.0 percent to ¥51.2 billion, or 552.7 yen per basic share. 

Sales of Bicycle components grew 26.1 percent to ¥274.0 billion, or 16 percent in U.S. dollars, driven by strong demand for new versions of the XTR, Alivio and Tourney TX mountain bike components, 105 road bike components, and disk brakes for road bikes introduced in 2014. Operating income grew more than twice as fast thanks to the preponderance of overseas sales, rising 57 percent to ¥62.0 billion.

In Europe, which buys the majority of Shimano's Bicycle products, retail sales remained buoyant following a mild winter, and distributors ended the year with relatively low inventories. In North America, bicycle sales approached normal levels despite a long winter that condensed the prime spring selling season. In Japan, retail sales of sports bicycles and mid-range and high-grade commuting bicycles remained robust despite a harsh winter and a sales tax increase in April. In China, consumers upgrading to higher quality bicycles continued to drive strong sales of sports bikes.

In the Fishing segment, sales increased 10.2 percent (2 percent in U.S. dollars) to ¥58.8 billion yen, and operating income increased 64.0 percent to 3.94 billion yen. Despite harsh weather, rising fuel prices and the new sales tax, Shimano was able to increase sales in its native Japan thanks to strong demand for its New Stella rods. Sales were robust in North America and China. 

Shimano ended the year with inventory valued at ¥68.2 billion ($566 mm), up 35.9 percent and cash and cash equivalents of ¥157.8 billion ($1.3 bn), up 22.6 percent.

The company issued 2015 guidance calling for net sales to grow 6.6 percent to ¥355.0 billion, with Bicycle component sales and Fishing tackle sales growing at about the same pace. Operating income if expected to climb 11.7 percent to ¥73.5 billion.