Shimano slightly lowered its outlook for the year after reporting earnings declined in the first quarter on a 12.5 percent revenue decline. Sales in the Bicycle Components segment were down 17 percent in the quarter while Fishing Tackle segment sales were up 7 percent.

Net sales decreased to ¥126,071 million ($944.5 mm) from ¥144,047 million a year ago. Operating income decreased 26.4 percent to ¥28,009 million, ordinary income decreased 27.4 percent to ¥28,596 million and net income, attributable to owners of the parent, decreased 29.7 percent to ¥20,203 million.

Shimano said in its quarterly report about the quarter, “During the first quarter of fiscal year 2023, interest rate hikes by the central banks of various countries to cope with rising prices, the prolonged turmoil in Ukraine and other factors weighed heavily on the normalization of the global economy. In Europe, easing concerns over tight energy supply and demand led to lower gas prices and government measures to address rising prices supported economic activity. In the U.S., although favorable employment conditions supported personal consumption, the economy was affected by monetary policy, including higher policy rates, leading to rising uncertainties. In China, restrictions on activities in place due to the spread of the novel coronavirus (COVID-19) eased, and the normalization of economic activities progressed. In Japan, although rising prices exerted downward pressure on personal consumption, the economy gradually recovered as signs of normalization of economic activities were seen under the with-COVID policy. In this environment, demand for bicycles and fishing tackle showed signs of cooling down.”

Bicycle Components Segment Sales Drop 17 Percent
In the Bicycle Components segment, net sales decreased 16.8 percent from the same period of the previous year to ¥98,298 million, and operating income decreased 31.8 percent to ¥22,123 million.

Shimano said, “Although the strong interest in bicycles cooled down as progress was made toward recovery to pre-COVID-19 day-to-day routines, interest in bicycles continued as a long-term trend. On the other hand, concerns about economic recession, including rapidly rising inflation, led to a slowdown in sales of completed bicycles, and market inventories generally remained high, despite ongoing supply and demand adjustments.

“Overseas, in the European market, interest in bicycles continued to be high, and retail sales of completed bicycles, especially e-bikes, was solid. Market inventories generally remained at high levels, although some high-end models were in short supply. In the North American market, sales remained weak and market inventories were at a consistently high level.

“In the Asian and South and Central American markets, although interest in bicycles was firm, sales remained somewhat sluggish due to cooling consumer confidence on account of currency depreciation and rising inflation. However, in the Chinese market, sales remained strong, especially for road bikes, owing to the growing momentum of outdoor sports cycling.

“In the Japanese market, the soaring price of completed bicycles due to yen depreciation and other factors slowed the pace of sales and market inventories remained somewhat high.

“Under these market conditions, the Shimano Group provided products to the market, including the new product Shimano 105 which is a high-end model for road bikes, and sport e-bike components, Shimano Steps series.”

Fishing Tackle Sales Climb 7 Percent
Net sales from the Fishing Tackle segment increased 7.4 percent from the same period of the previous year to ¥27,670 million, and operating income increased 5.9 percent to ¥5,894 million.

Shimano said, “The global interest in fishing showed signs of cooling down, despite the appearance of with-COVID activities, such as on-site fishing tackle shows taking place in various countries for the first time in several years. In the Japanese market, while there were inventory adjustment activities at retail stores, demand for high-priced products was brisk.

“Overseas, sales in the North American market softened compared to the previous year. In the European market, the Turkey-Syria Earthquake for the most part had no impact, and backed by stable demand sales remained strong. In the Asian market, sales were favorable as interest in fishing was buoyed by the spread of fishing culture. In the Chinese market, which was buffeted by the spread of COVID-19 at the start of the year, the market normalized in February, and sales were strong on the growing momentum for fishing trips. In the Australian market, sales remained firm, assisted by favorable fishing conditions, although demand began to show signs of slowing.

“Under these market conditions, order-taking was brisk for the new spinning reels Vanquish and the  highest-end model lure fishing rods World Shaula Limited and other products that were well received in the market.”

Outlook
Looking ahead, Shimano expects sales of ¥460,000 million in 2023 against ¥500,000 million under its previous guidance, operating income of ¥83,000 against ¥105,000 million previously, ordinary income of ¥96,500 million versus ¥119,500 million previously, and net income of ¥69,500 million against ¥86,500 million previously.

Under the updated guidance, sales for 2023 are expected to decline 26.9 percent from ¥628,909 million in 2022, operating income to drop 50.9 percent from ¥83,000 million, ordinary income to decline 45.3 percent from ¥176,568 million and net income to decline 45.8 percent from ¥128,178 million.

Photo courtesy Shimano