Shimano saw its net income soar by 48.7 percent to ¥76,222 million (€608.2m-$677.1m) in 2015 compared with 2014. However, it was down by 25.1 percent on the previous year when including foreign currency translation adjustments, and the outlook for this year is not so good.
In a summary of its 2015 financial results, the Japanese maker of bicycling components and fishing gear said that its net sales increased by 13.7 percent to ¥378,600 million (€3bn-$3.4bn) in reported terms, which means that they grew by just over 9 percent in local currencies. The operating margin stood at 22.46 percent, up from 19.75 percent in the previous year.
Net sales in the company's bicycle components segment increased by 14.6 percent from the previous year to ¥314,100 million (€2.5bn-$2.8bn). Shimano said that sales volumes in Europe were lower than in 2014. However, retail sales exceeded the previous year's level thanks to strong sales of high-end models.
In North America, demand was little affected by the weather, and retail sales were robust, boosted by the strong U.S. dollar and the continuing depreciation of the yen. Meanwhile, in China, the volume of bicycles sold at retail was below the previous year's level, reflecting the economic slowdown. On the other hand, sales of bicycles grew in Southeast Asia and South America.
In the fishing tackle segment, sales increased by 9.2 percent from the previous year to ¥64.2 billion (€512.2m-$570.2m) because of the positive impact of favorable fishing conditions in the U.S. and in the Pan-Pacific region. However, sales in Eastern Europe remained sluggish due to the slowdown of the Russian economy.
Distributors' inventory levels in Europe remained “virtually at the appropriate level,” while those in North America were “somewhat high,” said Shimano.
In the “Other” category, which is represented mainly by Pearl Izumi, sales were flat at ¥390 million (€3.2m-$3.5m), and they generated an operating loss of ¥135 million (€1.1m-$1.2m). The company took goodwill impairment charges of ¥362 million (€2.9m-$3.2m) on its Pearl Izumi operations in Europe and the U.S.
Across the group, sales increased by 5 percent in Japan, where they were hurt by higher prices charged because of the depreciation of the yen. Sales grew by 15 percent in North America and by 19 percent in Europe, but the growth on a currency-neutral basis reached around 3 percent and 15 percent in the two regions, respectively.
The company lowered its expectations for the first half of 2016, partly because production scheduled for 2016 was brought forward to the second half of 2015. In addition, Shimano voiced concerns about the possibility that the influx of refugees in Europe and the slowdown of the Chinese economy and other emerging economies may negatively impact the economic sentiment in Japan and Europe. Therefore, it is forecasting decreases of 7.6 percent in sales and 23.9 percent in net income for the 2016 financial year, with most of the decline occurring in the first half.
Meanwhile, the American newspaper Bicycle Retailer reported last week that Shimano is currently cutting prices on higher-end components in the U.S. by up to 40 percent. It said the difference between old wholesale prices and new retail pricing is such that retailers' margins have slimmed substantially for inventories currently on their shelves. Shimano declined to comment.
