In its Q3 2014 financial report, bicycle components & groupset specialist Shimano has commented on the political and economic backdrop it faces – with the first nine months of 2014 witnessing a deterioration in business sentiment across Europe and a weakening of personal consumption in Japan, which has had a consumption tax increase.
On the other hand, the depreciation of the Japanese yen boosted exports; and in the US, Shimano noted that corporate earnings and the labour market continued to improve and personal consumption has picked up.
As a result, for the first nine months of 2014, Shimano’s net sales increased 20.8% year on year to ¥241,012 million (US$2.1 billion). Operating income increased 54.5% to ¥47,969 million (US$425 million).
Focusing on its bicycle components activities, which account for a majority 82% of all Shimano operations (the remainder predominantly coming from sales of fishing tackle), the company has witnessed some positive trends.
Overall, sales from this segment increased 23.4% year on year to ¥196,437 million (US$1.7 billion, and operating income increased 53.5% to ¥44,707 million (US$396 million).
In Europe, despite a temporary decrease in retail sales owing to unsettled weather in August and September, Shimano notes that revenues have generally been buoyant since last winter, which was mild. In the US, which experienced an extremely harsh winter, despite a delay in the commencement of sales, retail sales have been generally brisk since spring and ‘comparable to the level in a typical year’.
In Japan, despite a severe winter, retail sales of sports bicycles and mid-range and high-grade community bicycles have been robust, even after the consumption tax increase. Sales of community bicycles, however, have weakened somewhat.
Sales of sports bicycles continued to grow in China, and sales growth in other emerging markets was also robust.
Distributor and retailer inventories were relatively low, or in an appropriate range, in all regions. In these market conditions, against a backdrop of rising expectations in view of promising market trends looking forward, order-taking was brisk as Shimano products were relatively affordable because of the depreciation of the yen.
Moreover, sales of new disk brakes for road bikes released in the third quarter were buoyant, as well as new models released in the second quarter, including ALIVIO mountain bike components, Tourney TX entry-level mountain bike components, and 105 road bike components.
As a result, Shimano has revised its forecast of consolidated business performance. With a slight increase on the previous forecast announced in July 2014, total consolidated net sales are forecast to reach ¥316,000 million (US$2.1 billion), with operating income of ¥61,000 million (US$540 million) and net income of ¥44,000 million (US$390 million).
