Shimano reported earnings slumped 46.3 percent in the first nine months of the year due to a weak cycling market.
Earnings reached 28.1 million yen, down from 36.9 billion yen in the same period a year ago. Sales in the nine months rose 1.8 percent to 246 billion yen.
The company said that during the first nine months of fiscal year 2017, the European economies were on a recovery trajectory owing to continued improvement in the labor market and recovery of personal consumption although
appreciation of the euro caused a lull in recent improvement in manufacturing.
In the U.S., despite temporary weakening of personal consumption in the aftermath of two major hurricanes, moderate economic expansion continued, driven by the buoyant labor market and improved consumer sentiment. In Japan, while the labor market continued to improve, a moderate recovery of the economy was evident, albeit lacking in vigor.
In these circumstances, inspired by our mission—“To promote health and happiness through the enjoyment of nature and the world around us”—the Shimano Group sought to attract consumers with a stream of captivating products designed to enrich the experience of cyclists and anglers around the world, and moreover attuned to the contemporary emphasis on well-being and the environment.
As a result, for the first nine months of fiscal year 2017, net sales increased 1.8 percent from the same period of the previous year to 245,969 million yen. Operating income decreased 4 percent to 46,550 million yen, ordinary income decreased 18.6 percent to 40,556 million yen, and net income attributable to owners of parent decreased
23.7 percent to 28,104 million yen.
Business Segment Overview
In Europe, retail sales of completed bicycles, which had been somewhat soft since the beginning of the year, were at the same level as the previous year for a first nine-month period despite lacking vigor, and distributor inventories of bicycles in Europe remained at an appropriate level.
In North America, retail sales of completed bicycles were approximately the same as the previous year’s level and distributor inventories continued to be somewhat low.
In China, retail sales of completed bicycles were below the previous year’s level as retail sales of lowend bicycles remained lackluster, although distributor inventories were at an appropriate level.
With regard to the other emerging markets, whereas retail sales of completed bicycles in Southeast Asia remained at the same level as the previous year, retail sales of completed bicycles in South America showed signs of recovery, particularly in Brazil and Argentina. Distributor inventories were at an appropriate level both in Southeast Asia and South America.
In the Japanese market, retail sales of both sports bicycles and community bicycles remained lackluster, but distributor inventories remained at an appropriate level.
In these market conditions, there are high expectations for the next season in Europe because of diversification of bicycle types, including E-bikes. Sales of both the DEORE mountain bike components released in May 2017 and the ULTEGRA road bike components released in June 2017 remained robust, and the additional ULTEGRA Di2 (electronic shifting system) and disc brakes released in August 2017 were well received in the market.
As a result, net sales from this segment increased 1.4 percent from the same period of the previous year to 195,626 million yen, and operating income decreased 4.9 percent to 41,105 million yen.
The Japanese market was robust, benefitting from the relatively stable weather.
Overseas, Texas and Florida, the two major markets in North America, were affected by heavy damage caused by major hurricanes in late August. In Europe, the overall market slowed somewhat, reflecting increases in distributor inventories in the UK and Germany and the impact of an extremely hot summer in Italy. On the other hand, in Asia, sales in China and South Korea continued to be robust, and the recovery trend of the Southeast Asian market, which had been affected by an economic slowdown, became clear in line with the progress of reduction in distributor inventories. In Australia, the market was robust owing to improved weather and a better economic environment.
In these market conditions, lure-related products and other new products were well received in the market and achieved robust sales growth. As a result, sales in Japan exceeded the previous year’s level. Overseas, although sales in North America lacked vigor because of the market conditions, overseas sales exceeded the previous year’s level thanks to buoyant sales in China and South Korea as well as in Australia and because sales in Southeast Asia were on a recovery track.
As a result, net sales from this segment increased 3.3 percent from the same period of the previous year to 50,058 million yen, and operating income increased 1.9 percent to 5,476 million yen.
Net sales from this segment decreased 3.3 percent from the same period of the previous year to 284 million yen and an operating loss of 32 million yen was recorded, following an operating loss of 123 million yen for the same period of the previous year.
Looking ahead, Shimano now expects its net income to reach 40,600 million yen, down from 42,100 million yen under its previous guidance. That compares to 549.7 million yen a year ago. Sales are still expected to reach 330,000 billion yen, which compares to 323 million yen a year ago.
Photo courtesy Shimano