Shimano Inc. reported sales for the nine months ended Sept. 30 were up nearly 21 percent compared with the same period last year thanks in part to a weaker yen. Sales of of Bicycle Components were brisk in North America, while sales of Fishing Tackle were brisk in Europe and Oceania.

The Japanese company said total net sales increased 20.8 percent to ¥241.0 billion ($2.3 bn) in the nine months ended Sept. 30 compared with the same period of the previous year. Operating income increased 54.5 percent to ¥48.0 billion ($466 mm), ordinary income increased 37.4 percent to ¥48.2 billion ($468 mm), and net income increased 35.9 percent to ¥34.7 billion ($337 mm).

Bicycle Components
In Europe, despite a temporary decrease in retail sales owing to unsettled weather in August and September, sales have been buoyant since the winter, which was mild. In the U.S., which experienced an extremely harsh winter, despite a delay in the commencement of sales, retail sales have been generally brisk since spring and comparable to the level in a typical year. In Japan, despite a severe winter, retail sales of sports bicycles and mid-range and high-grade community bicycles have been robust, even after the consumption tax increase.
Sales of commuting bicycles, however, have weakened somewhat. Sales of sports bicycles continued to grow in China, and sales growth in other emerging markets was also robust.

Distributor and retailer inventories were relatively low or in an appropriate range in all regions.

In these market conditions, against a backdrop of rising expectations in view of promising market trends looking forward, order-taking was brisk as Shimano products were relatively affordable because of the depreciation of the yen. Moreover, sales of new disk brakes for road bikes released in the third quarter, as well as new models released in the second quarter, including Alivio mountain bike components, Tourney TX entry-level mountain bike components, and 105 road bike components, were buoyant. Segment sales for the first nine months exceeded the figure for the same period of the previous year.

As a result, sales from this segment increased 23.4 percent from the same period of the previous year to ¥196.4 billion ($1.9 bn), and operating income increased 53.5 percent to ¥44.7 billion  ($434 mm).

Fishing Tackle
In the  Japanese market, conditions in the  retail market were challenging.  Unsettled weather throughout the country, including heavy rainfall in July and a typhoon in August, caused flooding and other damage, and resulted in fewer fishing opportunities for anglers. In addition, rising prices, especially the hike in gasoline prices, encouraged frugality among consumers and consumption stalled. Settled weather in September brought about good catching at various locations. In these market conditions, Shimano exceeded the previous years sales result because new products, including New Stella launched in March, met with a very positive reception in the market.

Overseas, sales remained generally robust, benefiting from the weakening of the yen. In particular, retail sales in Europe and Oceania were brisk. Sales in Asia were also robust despite a slowdown in economic growth.
As a result, sales from this segment increased 10.6 percent from the same period of the previous year to 44.3 billion ($430 mm) , and operating income increased 63.7 percent to ¥3.34 billion ($32 mm).

Sports facilities and other businesses
Sales from this segment increased 2.2 percent from the same period of the previous year to ¥287 million ($3 mm)  and an operating loss of ¥82 million was recorded, following an operating loss of ¥108 million   for the same period of the previous year.

Balance sheet
Total assets as of the end of the first nine months of fiscal year 2014 amounted to ¥359.5 billion ($3.5 bn),  an increase of ¥40.3 billion ($391 mm)compared with the figure as of the previous fiscal year-end. This increase was primarily due to an increase of ¥9.60 billion ($93 mm)  in cash and time deposits, an increase of ¥7.32 billion ($71 mm) in merchandise and finished goods, an increase of ¥6.89 billion in buildings and structures, an increase of ¥4.00 billion in work in process, and an increase of ¥2.99 billion in other current assets.

Total liabilities as of the end of the first nine months of fiscal year 2014 amounted to ¥57.2 billion ($555 mm), an increase of ¥8.91 billion compared with the figure as of the previous fiscal year-end. This increase was primarily due to an increase of ¥2.87 billion in income taxes payable, an increase of ¥2.81 billion in accounts payable-trade, and an increase of ¥1.26 billion in other current assets.

Net assets as of the end of the first nine months of fiscal year 2014 amounted to ¥302.3 billion ($2.93 bn), an increase of ¥31.4 billion compared with the figure as of the previous fiscal year-end). This increase was primarily due to an increase of ¥25.7 billion in retained earnings and an increase of ¥5.55 billion  in foreign currency translation adjustments.

Fiscal Year forecast
In view of the European Central Banks policy of  further monetary easing, European economies are expected to pick up, building on a modest recovery of both domestic and foreign demand. However, the possibility of prolonged economic sanctions on Russia and sluggishness of the French and Italian economies remain concerns. In the U.S., the Federal Open Market Committee (FOMC) announced its intention to terminate the third round of quantitative easing (QE3) at the end of October 2014 in view of the overall recovery trend of the American economy. Depending on the economic performance indicators, the Fed may raise interest rates in 2015. Thus, developments in the U.S. should be monitored. In China, whose economy is slowing, whether the government will pursue policies to achieve its GDP growth target is a focus of attention.

In Japan, the impact of the consumption tax increase has been protracted and the Japanese economy is expected to remain rather bearish. Exports, however, are likely to increase moderately against the backdrop of a recovery of overseas economies and further depreciation of the yen.

In these  circumstances,  the Shimano Group, while  closely monitoring economic trends in Japan and overseas, is endeavoring to further enhance management efficiency. 

The company upped its earnings forecast for the second time this year from its July 29 forecast, which called for full-year net sales of ¥310 billion, operating income of ¥58 billion and net income to ¥41 billion. Shimano’s new guidance calls for net sales of ¥316 billion ($3.07 bn), operating income of ¥61.0 billion ($592 mm), ordinary income of ¥61.0 billion ($592 mm) and net income of ¥44.0 billion ($427 mm).