TAICHUNG, Taiwan (BRAIN) — Revenue at Giant Manufacturing, the world's largest maker of bicycles, slumped last year driven down by weak sales in China and lower sales in the U.S. as high inventory levels and heavy discounting took its toll.
Giant posted revenue of NT$57.09 billion ($1.9 billion), down 5.5 percent from 2015. The company's after tax income also took a hit, down 20.2 percent to NT$3.07 billion ($101.5 million) year-over-year.
The figures, released Tuesday, were finalized at Giant's annual board of directors meeting held Monday.
Despite the downbeat financial report, Giant executives said sales in Europe of its electric bikes increased almost 50 percent, however the company declined to release unit sales figures.
"In the U.S its brand sales performance was down marginally due to the high inventory levels and heavy discounts from other bicycle brands," the report noted.
But it's China's weak economy and an upsurge in bike sharing programs that took the heaviest toll on Giant's performance last year. Overall, domestic demand in China fell 20 percent year-over-year.
"Currently there is no clear sign of recovery in China's bicycle market," the company said. China's overall economy is struggling and that has helped drive down demand at Giant-owned bicycle shops. And the sudden rise in bike-sharing, which has captivated consumers in most major cities, has also had an impact on consumer sales.
"The short term effect of bike sharing remains unclear. However, in the long run, Giant believes these services will have a positive impact in promoting cycling and increasing the cycling population," the report said.
On a more positive note, sales remained stable in Taiwan, a key local market, while sales were up in Japan and Australia.
As for its outlook on 2017, the company is bullish on e-bike sales growing in Europe and a sales recovery in the U.S. market as inventory levels stabilize and early season discounting abates. Still, China with its weak economy and booming bike-share programs will remain a drag on its overall performance for the year, the report said.