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Giant's first-quarter revenue slides, reflecting continued market turmoil

Published May 11, 2017

TAICHUNG, Taiwan (BRAIN) — First-quarter revenue at Giant Manufacturing, the world's largest producer of bikes, continues a downward trend pointing to what could be another tough year for the industry.

First-quarter revenue dropped 5.9 percent to NT$13.5 billion ($447.4 million), compared with NT$14.4 billion a year earlier.

Giant's first-quarter report follows a weak 2016, when it posted annual revenue of NT$57.09 billion, a 5.5 percent decline compared with 2015. That decline reflected turmoil in the market, particularly in China, and a general weakness in global sales.

Perhaps more troubling for Giant executives is a steep decline in after-tax revenue in the first quarter — off 39.6 percent to NT$516 million from NT$855 million a year earlier.

And the company's before-tax net was also down 34.3 percent to NT$711 million.

A combination of factors are taking a toll on Giant's performance, ranging from currency fluctuations, continued soft demand in the Chinese market, poor weather in Taiwan that's sapping domestic sales, and marginal growth in two key markets — Japan and Australia.

"With fluctuations in currencies and soft demand in the Chinese market, 2017 continues to pose many challenges," a company spokesman said. On a more upbeat note, the company said European growth will remain stable, driven mainly by continued demand for e-bikes, and its forecast suggests that U.S. sales will grow this year as the market returns to normal.

The hoped-for boost in U.S. sales could be helped by a new range of e-bikes that Giant is introducing, the spokesman added.

But China, where the company has significant investments in stores and manufacturing, is of key concern. The nation's fascination with bike share programs is robbing sales from its retail partners, particularly for midrange to high-end bikes. The company hopes to stabilize sales in China by the end of the year.

In April Giant executives said, "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.

"Despite the unfavorable market situation, Giant will continue to focus on delivering innovative products to the market, strengthening development of it own brand of components, and improving service values throughout its distribution network," the company stated.

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