Shimano’s earnings showed some recovery in the first quarter with the help a strong profit uptick in the company’s Fishing Tackle segment and a modest gain at the company’s Bicycle Components business.

The Japanese-sporting goods giant, which also owns Pearl Izumi, is aiming for a bounce-back in earnings following two straight years of declines. Earnings were down 24.6 percent in 2017 and 33.1 percent in 2016.

In the quarter ended March 31, net earnings rose 13.2 percent to ¥10.79 billion ($1.0 bn) and operating income climbed 10.9 percent to ¥16.9 billion. Sales reached ¥85.2 billion ($779 mm), up 6.7 percent year-over-year.

Earnings were boasted by cost containment. SG&A expenses were up only 1.7 percent to ¥17.7 billion ($162 mm), shrinking to 20.7 percent of sales from 22.5 percent. Gross margins eroded slightly to 40.6 percent from 41.6 percent.

In the Bicycle Components, sales increased 5.1 percent to ¥68 billion ($622 mm), while operating income increased 5.5 percent to ¥14.8 billion ($155 mm).

Shimano said in its statement, “In Europe, while retail sales of completed bicycles, mainly E-BIKE, stayed in a robust situation since the second half of the previous year, distributor inventories of bicycles remained at an appropriate level. In North America, although retail sales of completed bicycles were sluggish at the beginning of the year, distributor inventories maintained an appropriate level. In China, retail sales of completed bicycles showed no signs of recovery and retail sales of low-end and middle-range bicycles continued to be sluggish, although distributor inventories remained at an appropriate level. With regard to the other emerging markets, retail sales of completed bicycles in Southeast Asia showed signs of recovery, but still lacked vigor. Retail sales of completed bicycles in South America maintained recovery from the second half of the previous year, 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 were lackluster, partly due to unstable weather, such as heavy snowfalls. Distributor inventories remained at a slightly high level, though they were in an appropriate range. Under these market conditions, the SHIMANO STEPS E8000 drive unit for E-MTB, the DI2 (electronic shifting system) version and the disc brakes of the ULTEGRA road bike components were well received in the market since the previous year.”

In the Fishing Tackle segment, net sales increased 13.2 percent from the same period of the previous year to ¥17. 2 billion ($157 mm), and operating income increased 65.8 percent to ¥2.2 billion ($20 mm).

Shimano’s released stated of the Fishing Tackle segment, “In the Japanese market, retailers’ New Year sales were strong, but sales were weak thereafter due to cold weather and heavy snowfalls. Overseas, sales in Europe were stagnant due to cold weather and other factors and distributor inventories increased in the major markets of Germany and the UK. In the North American market, sales remained robust supported by the firm economy.

“In Asia, sales in China, South Korea and Southeast Asian markets continued to be robust, led by sports fishing, though sales in Taiwan were stagnant. In Australia, sales were stagnant partly due to cyclones that hit the country in March. Under these market conditions, in Japan, new products like the STELLA and the Bantam were well-received in the market. As a result, sales in Japan exceeded the previous year’s level. Overseas, although sales in Australia fell below the previous year’s level due to the cyclones, overseas sales on the whole exceeded the previous year’s level because sales in Europe, North America and Asia exceeded the previous year’s level.”

Looking ahead, Shimano said the company’s forecasts of income have been revised because non-operating expenses were recorded in the first quarter owing to the depreciation of the U.S. dollar against major Asian currencies.

Net income for 2018 is now expected to reach ¥46 billion versus guidance of ¥47.2 billion previously. In 2017, net earnings were ¥38.4 billion. Shimano continues to expect sales to reach ¥350 billion for the year against ¥335.8 billion in 2017.

Photo courtesy Shimano