Shimano sales down 30% in 2023, net profit down 52.3%!
The Shimano Group's sales performance declined sharply in 2023, with sales down 30 per cent and net profit down an even steeper 52.3 per cent year-on-year. The decline in Shimano's business results coincided with developments in the global bicycle market, where the business of manufacturers of bicycles and their components has generally suffered under the twin woes of changing consumer demand and high inventories in the supply chain. According to Shimano's 2023 financial report, the company's bicycle business saw a 24.6% year-on-year decrease in revenue, a more than 50% drop in net profit, and an unenthusiastic sales outlook for 2024, with no significant growth expected.
The financial downturn Shimano's woes stemmed mainly from high market inventories and continued weak demand, leading to a 29.5 per cent year-on-year drop in net sales to JPY364,679 million (€2.26 billion), while operating income fell by 52.3 per cent to JPY65,251 million (€405 million). Nonetheless, Shimano's sales are still significantly higher than pre-epidemic levels, with Shimano posting net sales of ¥297.8bn (€1.85bn) for bicycle components in 2019, also reflecting its resilience in the face of challenging market conditions.
Declining revenue as a long-term trendDespite the short-term challenges, Shimano remains optimistic about the long-term trends in the bicycle market. The company believes that despite a slowdown in market growth, interest in bicycles remains high and that interest in bicycles is not limited to major European markets such as Germany, the Netherlands and Belgium, where demand remains strong despite the current impact of inflation and economic slowdown. For 2024, Shimano expects a further decline in sales, particularly in bicycle components, from ¥364,679 million (€2,260 million) in 2023 to ¥325,000 million (€2,020 million) in 2024. High inventory levels in Europe mean that this part of the market will suffer the biggest decline. For Europe, Shimano expects sales in 2024 to be 18 per cent lower than in 2023, but still above 2019 levels.
Strong sales in China High inventory in the market is a major factor in Shimano's sales decline. Rising inventory levels have slowed down sales, placing greater demands on the company's cash flow and inventory management. In the bicycle industry, where product replacement is rapid, excess inventory can lead to greater depreciation and sales at reduced prices, further squeezing profit margins. However, in China, Shimano's sales performance remained strong, thanks to the continued popularity of outdoor sports cycling, especially road bikes, and market inventories were kept at moderate levels. Although high inventory levels globally were the main reason for the sales slowdown, the strong performance in China offers a glimmer of hope for Shimano.
Geopolitical risks affecting the market Geopolitical risks are also a non-negligible factor affecting the market, e.g. the situation in Ukraine and continued tensions in the Middle East could disrupt the global supply chain and put further downward pressure on economic growth. In addition, the 2024 election calendar could have an impact on interest rates in various countries, further adding to market uncertainty. In summary, although Shimano Group is facing a decline in financial performance in 2023, the company remains positive about the long-term market, with sales set to decline further in 2024, particularly in Europe, while a strong sales performance in China may serve as a respite for the business. Hopefully, our Gravity will be able to add our share in pulling Shimano's sales up!
-Gravity Ebikes
info@gravitysz.com
22th/02/24