Shimano's profits took a hit in 2017, which the company blamed on a weak cycling market across the globe, especially in Japan and China. However, the company saw a return to double-digit growth in the bicycle components segment in the fourth quarter, driven by the European market.
Net income for the full year dropped by 24.6 percent to 38,443 million yen (€289.5m-g$361.0m). Sales increased by 4.0 percent to 335,800 million yen (€2.5bn-$3.2bn).
In the bicycle components segment, Shimano's revenues for the year improved by 4.1 percent to ¥270,206 million (€2.0bn-$2.5bn). However, the division recorded a 0.8 percent drop in operating income to ¥57,410 million (€432.3m-$539.1m).
In Japan, retail sales of sports bicycles and community bicycles were both sluggish. However, Shimano reported robust sales for both its Deore mountain bike components, released in May 2017, and its Ultegra road bike components, released in June 2017. Also the Ultegra Di2 electronic shifting system and disc brakes released in August 2017 were well received in the market.
In Europe, while retail sales of complete bicycles were sluggish at the beginning of the year, sales picked up from the middle of 2017 and were eventually at the same level as in the previous year. In North America, retail sales of complete bicycles lacked vigor and were at approximately the same level as in 2016.
In China, sales were below the previous year's level, partly due to the sharp growth in bike sharing. Sales lacked vigor in Southeast Asia and South America, but they remained largely flat.
Shimano's fishing tackle segment performed better, with a 2.5 percent increase in operating profit to ¥7,013 million (€52.8m-$65.9m) for the year on 3.3 percent higher sales of ¥65,220 million (€491.1m-$612.4m).
The company said the Japanese market was robust, benefiting from stable weather. Overseas, Texas and Florida, two major markets in North America, were affected by the heavy damage caused by hurricanes in late August.
In Europe, the company said that distributor inventories of fishing tackle products went up and retail sales slowed down in the U.K., Germany and Italy.
On the other hand, in Asia, fishing tackle sales in China and South Korea continued to be robust, and the Southeast Asian market is now recovering from its economic slowdown, leading to lower distributor inventories.
In Australia, despite a delay in the start of the fishing season and the sluggish performance of major chain stores, sales stabilized in the second half of the year.
Looking at the company as a whole, Shimano anticipates growth in Europe during 2018 following improvements in employment levels and strengthening consumer spending, although exports may slow down due to the euro's appreciation. About the U.S., it believes the economy will be upheld by a better corporate investment sentiment resulting from tax reforms and by a recovery in personal consumption on the back of a good employment environment.
The company forecasts sales increases of 6.3 percent in the first half of 2018 and 4.2 percent for the full year.