OSAKA, Japan (BRAIN)—Shimano felt the pinch from the global economic recession in the first half of 2009 as a sharp drop in personal consumption led to lackluster sales in both the bicycle components and fishing divisions.
Slow sales coupled with the impact of foreign exchange fluctuations dealt a severe blow to manufacturers and exporters, the company said in an earnings report released on Monday.
Net sales fell to 90, 057 million yen ($934 million) for the first half of 2009 compared with 115,497 million yen ($1.08 billion) during the same period in 2008.
Net income was 6,565 million yen ($68 million), a drop of nearly 50 percent from the year before, which was 12,509 million yen ($117 million).
In the bicycle division, first-half 2009 sales were 68,121 million yen ($707 million) compared with 88,912 million yen ($838 million).
In an overview of the bicycle segment, the company said:
“After a significant drop in the demand for bicycles in the popular price zone both in the Japanese market and in overseas markets, reflecting weak consumer confidence amid the global economic crisis, the decline in demand appeared to have bottomed out. However, since it will take some time to reduce inventories, shipments of the company’s products in the popular price zone did not pick up.
“Nevertheless, consumer demand for mid-range and high-end sports bicycles remained firm in Japan, the United States and Europe, underpinned by worldwide interest in health and the environment. However, there was a definite trend toward inventory trimming in the market and this took longer than initially anticipated. As a result, shipments of the company’s mid-range and high-end products remained at relatively low levels.”
Shimano said it has not changed its forecast for its year-end results, which it already revised in April due to poor economic conditions. The company expects to report net sales of 195,000 million yen and net income of 17,500 million for all of 2009.
Note: All 2009 currencies assume an exchange rate based on June 30, 2009 rate of $1=96 yen. All 2008 numbers use the June 30, 2008 exchange rate of $1=106 yen.