Shimano Inc. of Japan reported better than expect financial results for the first quarter thanks in part to the cheaper yen and brisk sales of bicycles.

The maker of bicycling components and fishing gear reported profits soared on a 29.5 percent surge in sales, which reached ¥98.0 billion ($823 mm). Operating income increased 63.0 percent to ¥23.2 billion ($195 mm), ordinary income increased 96.8 percent to ¥27.2 billion ($228 mm), and net income increased 104.8 percent to ¥20.4 billion ($171 mm).

Bicycle Components
Shimano said weather had no impact on demand for its Bicycle Components in either Europe or North America during the quarter. Sales from this segment increased 34.2 percent from the same period of the previous year to ¥81.9 billion ($688mm), and operating income increased 65.1 percent to ¥22.0 billion ($185 mm).

“Retail sales in the first quarter were brisk,” the company reported. “As a result, distributor inventories remained slightly lower than the appropriate level.”

In Japan,  retail sales of sports bicycles continued to be robust,  but retail sales of community bicycles were weak, due large to the impact of price increases resulting from the depreciation of the yen, and distributor inventories of community bicycles remained somewhat high.

While sales of sports bicycles in emerging markets continued  to grow robustly, retail sales of sports bicycles in China, which has been the leading driver of demand for sports bicycles, were flat with year ago levels.

“In these market conditions, against a backdrop of rising expectations in view of promising market trends going forward, order-taking was brisk,” said Shimano. “In addition, Shimano products remained relatively affordable because of the entrenched depreciation of the yen. Thus, segment sales for the first quarter exceeded the forecast.”

Fishing Tackle
At Shimano's Fishing Tackle segment, sales increased 9.9 percent from the same period of the previous year to ¥16.0 billion ($134 mm), and operating income increased 34.1 percent to ¥1.20 billion.

The Japanese market got off to a sluggish start because anglers had fewer opportunities to go fishing due to heavier snow falls than in a typical year and rough weather from the New Year onward. The company also was comping against a spike in sales a year earlier as Japanese consumer rushed to buy products ahead of an increase in the country's sales tax.

Overseas, despite a slowdown in Eastern Europe, sales in Europe as a whole, including Western Europe, increased. Sales in North America also increased, reflecting numerous pre-orders received mainly from major customers partly because concerns about the economy abated. Sales in Oceania, including New Zealand, were robust thanks to good weather and good catching.

Forecast tweaked for fiscal 2015

Shimano revised the forecast of consolidated business performance announced on February 10, 2015, for the first half of the fiscal year ending December 31, 2015, and for the full year. The revised forecast calls for net sales of ¥193.7 billion, operating income of ¥45.0 billion, ordinary income of ¥49.0 billion and net income of ¥36.5 billion for the first half of fiscal year 2015, and net sales of ¥357.0 billion, operating income of ¥76.5 billion, ordinary income of ¥80.5 billion and net income of ¥59.0 billion for the full year.

(1)   
Consolidated Statements of Income

(Millions
of yen)

 

First Quarter of FY2014 Jan. 1, 2014 to

Mar. 31, 2014

First Quarter of FY2015 Jan. 1, 2015 to

Mar. 31 2015

Net sales

75,695

98,022

Cost 
of sales

46,956

57,429

Gross profit

28,739

40,592

Selling, 
general  and  administrative expenses

14,511

17,400

Operating
income

14,227

23,191

Non-operating income

Interest income

249

336

Dividend income

14

82

Foreign 
exchange gains

3,653

Others

383

82

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