Following a downturn previously reported for the first nine months of 2016, Shimano has reported that overall group net sales in the full year of 2016 decreased 14.7% year on year to ¥323 billion (US$2.9 billion). Operating income decreased 24.1% to ¥64.5 billion, and ordinary income decreased 30.8% to ¥70.0 billion. For its bicycle components operations, Shimano reported that net sales decreased 17.4% year on year to ¥259.5 billion in 2016 and operating income decreased 27.5% to ¥57.9 billion.
In Europe, Shimano pointed to bad weather in early spring, which ‘greatly undermined retail sales of completed bicycles, resulting in a continuing high level of distributor inventories’. However, thanks to good weather from July onward, ‘sales became brisk [and] as a result, distributor inventories were adjusted to an appropriate level’.
In North America, retail sales of completed bicycles were slightly less than in the previous year. However, distributor inventories of bicycles, which had been high since the beginning of 2016, were adjusted to a lower level than in the previous year.
In China, lacklustre retail sales of sports bicycles ‘persisted from the previous year owing to the economic slowdown and bad weather’, and were below the previous year’s level. On the other hand, distributor inventories, which remained at a high level, started to stabilize.
As regards other major emerging markets, retail sales of sports bicycles in Southeast Asia, which had been robust, were at a level lower than the previous year. Sales in South America continued to be soft because of the economic slowdown and weak currencies.
In the Japanese market, retail sales of sports bicycles, which had been robust until the previous year, were ‘lower than the previous year’s level and distributor inventories were somewhat high’. Retail sales of community bicycles remained weak, continuing from the previous year.
Shimano noted that during 2016, European economies were on a moderate recovery trajectory as personal consumption remained brisk and exports started to recover, despite growing pessimism following the referendum result in favour of Brexit. In the US, a moderate economic recovery continued owing to robust personal consumption supported by steadily improving labour market.
On the other hand, Shimano observed that the Japanese economy lacked vigour with the negative effect of currency situation and sluggish growth of personal consumption.
Casting forward to 2017, Shimano expects a moderate recovery of European economies. Although, the company noted that the tempo of economic recovery may slow as the UK starts the negotiation process towards Brexit.
Shimano’s full year total group sales are forecasted at ¥330,000 million for 2017. Of this, the company is projecting ¥264,000 from its bicycle components business this year.
