Shimano, Inc.’s sales tumbled 19.8 percent in the nine-month year-to-date (YTD) period through September as sales in its Bicycle Components segment dropped 24.8 percent with the decline tied to high inventories in the IBD channel. The Japanese-based company nonetheless slightly raised its outlook for the year as orders in the back half weren’t as soft as expected.

Sales in the YTD period declined to ¥375.26 billion ($2.5 bn) from ¥467.67 billion in the prior-year YTD period. Operating income decreased 43.0 percent to ¥72.09 billion ($481 mm) and net income fell 47.0 percent to ¥60.17 billion ($401 mm).

Subtracting six-month results from nine-month results shows sales in the third quarter were down 31.7 percent to ¥112.01 billion ($747 mm), operating income declined 60.2 percent to ¥18.18 billion ($121 mm), and net earnings were off 78.2 percent to ¥9.79 billion ($65 mm).

Bicycle Components Sales Drop  24.8 Percent in Nine Months
Shimano’s Bicycle Components segment sales in the nine months decreased 24.8 percent from the same period of the previous year to ¥289.44 billion ($1.9 bn) while operating income decreased 48.8 percent to ¥55.92 billion ($374 mm).

Subtracting six-month results from nine-month results shows sales in the Bicycle Components segment plunged 37.6 percent in the third quarter to ¥84.56 billion ($563 mm). Operating profits were down 65.0 percent to ¥13.82 billion ($92 mm).

Shimano said of the segment, “Although the strong interest in bicycles cooled down, interest in bicycles continued to be high as a long-term trend. On the other hand, market inventories generally remained high, despite ongoing supply and demand adjustments.

“Overseas, in the European market, the strong interest in bicycles continued in our major market, namely, Germany and Benelux countries, and retail sales of completed bicycles were strong. Market inventories, however, remained at high levels.

“In the North American market, retail sales of completed bicycles remained weak and market inventories were at a consistently high level, despite some progress in inventory adjustment.

“In the Asian, Oceanian and Central and South American markets, although interest in bicycles was firm, retail sales of completed bicycles remained somewhat sluggish due to cooling consumer confidence on account of rising inflation and economic uncertainty, and market inventories were at a high level. However, in the Chinese market, sales remained strong, especially for road bikes, owing to the continued popularity of outdoor sports cycling, and market inventories remained at an appropriate level.

“In the Japanese market, retail sales were somewhat sluggish as affected by the soaring price of completed bicycles due to yen depreciation and pullbacks in consumer spending and market inventories remained somewhat high.

“Under these market conditions, the Shimano Group received a favorable reception for its new products, including Shimano 105 equipped with a twelve-speed derailleur, and a gravel-specific component Shimano GRX.”

Fishing Tackle Segment Sales Increase 3.4 Percent In Nine Months
In its Fishing Tackle segment, sales in the nine months increased 3.4 percent from the comparable period last year to ¥85.47 billion ($570 mm), and operating income decreased 7.3 percent to ¥16.20 billion ($109 mm).

Subtracting six-month results from nine-month results shows sales in the Fishing Tackle segment were down 3.4 percent in the third quarter to ¥27.45 billion ($183 mm). Operating income was down 29.1 percent to ¥4.36 billion ($29 mm).

Shimano said of the segment,  “Although the global high demand for fishing tackle cooled down, interest in fishing continued as an outdoor leisure activity.

“In the Japanese market, with leisure options becoming diversified, there was a decline in the number of new family users and beginners that had increased during the COVID-19 pandemic, on account of rising prices and unfavorable weather conditions, leading to sluggish sales of popularly priced products.

“Meanwhile, willingness to buy high-priced products was firm among long-time fishing enthusiasts. Overseas, while sales in the North American market continued to be weak, demand remained high for high-priced products.

“In the European market, demand was stable in some areas, but sales were lackluster partly due to unfavorable weather conditions in summer.

“In the Asian market, sales continued to be favorable as demand was high for high-priced products in the Chinese market.

“In the Australian market, assisted by favorable fishing conditions, demand for products became robust and sales were strong.”

Outlook
Regarding its outlook, Shimano stated, “The consolidated business performance forecasts have been revised as follows in light of current trends in the first nine months of fiscal year 2023 where market inventories remain at a high level, but the outlook will remain uncertain. Despite such conditions, orders for the Group, which had gone through revisions in light of unfavorable weather conditions in this early spring, did not fall as much as projected, and non-operating income was recorded due to the depreciation of Asian currencies caused by the stronger U.S. dollar. Meanwhile, other factors have been also taken into account, such as the recording of provision for expenses associated with a free inspection and replacement provided to certain products under a free inspection program, as a loss on free inspection under extraordinary losses.”

Sales for the year are now expected to reach ¥462.0 billion, up from previous guidance of ¥450.0 billion. Operating income is now expected to be ¥77.0 billion, up from the previous guidance of ¥70.0 million. The forecast for net income was lowered to ¥66.0 billion from ¥69.0 billion previously. Year-over-year, sales under the updated guidance are forecast to decline 26.5 percent, operating income to drop 54.5 percent; and net income to decline 48.5 percent.

Photo courtesy Shimano