Shimano Inc. reported sales fell 20.6% to ¥186.7 billion ($2.0 bb) for the year ended Dec. 31, compared to ¥235.0 billion ($2.3 bb) in 2008.

 

The Japanese manufacturer of cycling components and fishing tackle reported that operating income plunged 45.7% to ¥20.5 billion ($219 mm) from ¥37.8 billion ($366 mm) the prior year. Net income declined 62.0% to ¥9.6 billion ($103 mm), or ¥99.8 per share ($1.06), compared to ¥25.2 billion ($244 mm), or ¥262.1 ($2.54) per share  in 2008.


The company said that sales of bicycle components fell 22.2% to ¥144.7 billion ($1.6 bb), resulting in a 43.4% decline in operating income to ¥18.9 billion ($1.34 bb). In fishing tackle, sales fell 12.2% to ¥40.7 billion ($435 mm), while operating come plummeted 61.0% to ¥1.1 billion ($11 mm).


The one area of dramatic improvement was cash flow, which more than doubled to ¥42.6 billion from ¥19.9 billion. A quarter of that, or ¥10.5 billion came from decreased inventory. 

 
Despite lingering doubts about the sustainability of the recovery, Shimano said it expects net sales to rise 7.7% in the first half of fiscal 2010 and 9.8% for the entire fiscal year to ¥205 billion. That included ¥161.0 billion in bicycle component sales and ¥43.0 billion in fishing tackle sales.  The forecast called for operating income to rebound 46.1% to ¥30.0 billion yen and net income to rise 109.3% to ¥820.0 billion, or ¥201.7 per share, with the bulk of that growth coming in the second half of the year. The company said improved profitability would also come from streamlining of production and logistics.


Shimano attributed the steep decline to the global recession and said the Japanese economy remained in a severe situation.


Both the bicycle components business and the fishing tackle business suffered greatly from the decline in consumer confidence as well as inventory adjustment in the market, the company said in its earnings release.


Sales of bicycle components were sluggish across all price ranges despite a steady increase in the number of cyclers worldwide. However, Shimano said the the inventory adjustment had amost run its course and that there were signs of recovery in the mid-range and high-end product categories.


The same dynamics were in force in the fishing tackle business. In North America, the business turned around in the third quarter as retailers began restocking. But a recovery had not yet begun in either Europe or Japan, where dealers continued to work off inventory and consumers kept away from higher end product.