Shimano reported net sales of ¥133.1 billion (€1.04bn-$1.38bn) for the first half ended June 30, representing a 7.7 percent increase from the first half of 2012. The revenues of its bicycle division grew and fulfilled the company's previous forecast despite unfavorable weather conditions in key regions, offset by the depreciation of the yen, which acted positively on the sales figures, and thanks to the rising popularity of Shimano products in Europe and North America. Consolidated net income reached ¥17.8 billion (€138.7m-$185.0m), up 16.6 percent from a year earlier. Operating income decreased by 3.0 percent to ¥21.2 billion (€165.2m-$220.4m).
The company's 27 consolidated subsidiaries have changed their fiscal year-end from Nov. 30 to Dec. 31 effective from Dec. 31, 2012. Their financial statements used for the preparation of the consolidated financial statements for the first half of the fiscal year ended June 30, 2012 were for a period of seven months. As a result, net sales increased by ¥2.9 billion (€22.6m-$30.1m), operating income increased by ¥1.6 billion (€12.5m-$16.6m), and income before income taxes and minority interests increased by ¥1.7 billion (€13.2m-$17.7m) in the first half of the fiscal year ended June 30, 2012.
Gross profit reached 36.2 percent of sales in the first half of fiscal 2013, down 150 basis points from the year-earlier period. SG&A increased to ¥27.0 billion (€0.21bn-$0.28bn), or 20.3 percent of sales, up 20 basis points.
The sales of the company's bicycle components division increased by 8.3 percent in the first half to ¥106.1 billion (€830m-$1.10bn). Operating income declined or this segment by 0.2 percent to ¥20.3 billion (€160m-$210m). In Europe, retail sales were low due to bad weather through the first half of the year combined with the stagnating economy. Retail sales in Japan remained low, also affected by a severe winter. In the U.S., many regions suffered from poor weather at the beginning of the year but retail sales recovered with the improvement of the weather from May onward. In emerging markets, where growth is continuing, particularly in China, shipments proceeded virtually as scheduled and sales of new products, including Deore and Altus mountain bike components and Claris road bike components, were buoyant.
Sales by the company's fishing tackle division rose by 5.9 percent to ¥26.8 billion (€210m-$280m). The segment's operating income fell by 37.9 percent to ¥991 million (€7.72m-$10.30m). In the Japanese market, retail sales began to pick up in March after a poor start to the year because of unusually cold weather. In Europe and North America, the business environment remained challenging, combined with unsettled weather conditions. In Asia, sales to retailers increased despite concerns over the slowdown of the Chinese economy, driven by the Southeast Asian market. In Oceania, brisk sales to retailers continued despite difficult weather conditions such as the drought afflicting some parts of Australia.
Revenues from other businesses decreased by 16.8 percent from the same period of the previous year to ¥191 million (€1.49m-$1.99m), with an operating loss of ¥65 million (€506,000-$676,000), following an operating loss of ¥72 million (€0.56m-$0.75m) for the same period of the previous year.
Shimano ended the half-year period with inventory valued at ¥27.6 billion (€0.22b-$0.29m), up 19.1 percent. Inventories of finished bicycles remained slightly high in both Europe and North America at the end of the period, while inventories of components were at appropriate levels.
The company lowered its earnings forecast for the full fiscal year ending Dec. 31, 2013 to operating income of ¥43 billion (€340m-$450m) and net income of ¥31 billion (€240m-$320m). Concerns persist in particular about the impact of the ongoing sovereign debt crisis in Europe, which is Shimano's biggest market. The U.S. economy is expected to grow at a moderate pace, while in Japan the economy is expected to recover strongly, as the weak yen has triggered an export boom that has spurred both personal and business spending. For the full year, the company expects to register net sales of ¥260 billion (€2.03bn-$2.70bn).
