Shimano reported a 12.3% drop in sales and a 26.1% drop in operating profit in the bicycle sector in the first three quarters of the current fiscal year. This meant that sales fell to around 1.5 billion euros compared to the same period last year, with an operating profit of 250 million euros.
From January to September this year, Shimano's bicycle division's net sales fell 12.3% year-on-year to 253.861 billion yen (about 1.53 billion euros), and operating profit fell 26.1% year-on-year to 41.342 billion yen (about 249 million euros). Shimano's year-on-year sales decline narrowed from -22.7% in the first quarter and -20.7% in January-July to -12.3% in January-September, a slight improvement. The market recovery was not as fast as Shimano's performance forecast released in July, and the third-quarter results showed that market conditions remained severe. The Japanese parts manufacturer blamed part of the adverse weather conditions in Europe in the spring and the inventory bubble.
Normalization of inventory levels
Almost all leading e-bike and mountain bicycle manufacturers have implemented a destocking strategy, which is clearly reflected in Shimano's financials. However, Shimano still reports that "finished bicycle inventory remains high" for OEMs (original equipment manufacturers) and that "retail inventory is also showing an upward trend." Shimano pointed out that bicycle retail sales remain weak due to the previously mentioned bad weather, with inventory levels in Europe being particularly prominent. This situation is consistent with the general view at Taichung Bike Week in September, when industry insiders revealed that the market's expected recovery and normalization of inventory levels may be delayed until mid-2025.
Further progress in North America
The report shows that in the North American market, despite the weakening retail volume, the demand for bicycles is strong, and the inventory adjustment of the finished bicycle market continues. Private consumption in the Asian, Oceania, Central and South American markets is still weak, the retail sales of finished bicycles are weak, and the market inventory is at a high level. In the Chinese market, the overall popularity of bicycles continues, and the retail sales of finished bicycles are good, especially road bicycles, and the market inventory remains at a reasonable level. In the Japanese market, affected by the sharp increase in the price of finished bicycles, retail sales are sluggish, and the market inventory adjustment continues. Shimano's half-year report in 2024-net sales fell 20% year-on-year, but the performance of the European market has rebounded!
Weaker dollar lowers net income forecast
The weakening of the US dollar against Asian currencies affected Shimano's net income results. The company lowered its net income forecast for this year due to exchange rate reasons, but maintained its original expectations for sales and operating income. In the first nine months of the previous fiscal year, Shimano recorded a non-recurring loss of 17.908 billion yen due to the implementation of a "free inspection" recall program for road bicycle cranksets. This year, the company did not allocate any additional expenses for the recall program.
