DACUN TOWNSHIP, Taiwan (BRAIN) — Taiwan bike makers Merida Industries and Ideal Bike are each reporting first-half losses as the Taiwan dollar gains strength against most currencies. Giant and Shimano also have recently blamed poor profit reports, in part, on exchange rates. Meanwhile, two Taiwan bike makers say YT Industries owes them money.
The first quarter was positive for both Merida and Ideal.
Merida's first-quarter sales revenue of NT$7.6 billion was up 29% year-over-year. And Merida said currency exchange differences resulted in a NT$388 million contribution to its Q1 comprehensive income, which was NT$841 million.
At Ideal, first-quarter sales revenue was NT$744 million, up 19% year-over-year. Ideal said currency exchanges contributed NT$58 million to its Q1 comprehensive income, which was a loss of NT$11 million.
Things changed in the second quarter, when Merida's sales revenue was NT$7.0 billion ($233 million at Aug. 14 exchange rates), down 33% from NT$9.3 billion in the same period last year. Currency exchanges cost Merida NT$2.4 billion in the second quarter. Merida's profit from continuing operations in the quarter was NT$450 million, down from NT$705 million year-over-year. Earnings per basic share was NT$1.32, down from NT$2.19. For the first half, Merida had a profit from continuing operations of NT$903 million but a comprehensive loss of NT$436 million.
At Ideal, Q2 sales revenue was flat year-over-year, at NT$716 million. Exchange rates cost Ideal NT$147 million in the period. That contributed to Ideal's first-half loss of NT$235 million, a loss per share of NT$0.72. In the first half of 2024, Ideal had a loss of NT$47 million, or a loss per share of NT$0.15.
Since January, Taiwan's dollar has increased in value 11.2% against the U.S. dollar and 9.6% against the Chinese Remnimbi, see chart below.
Fallout from YT restructuring
Ideal also reports that the restructuring of its customer YT Industries in Germany exposed it to some risk. Ideal’s creditor claims against YT Industries GmbH's operations in Germany and Taiwan total $423,000 (US). Ideal’s lawyers are requesting that YT Industries GmbH pay off the debts or return the goods.
Kenstone Metal, another Taiwan bike maker, which is a subsidiary of publicly traded Darfon Electronics, has also notified the Taiwan stock exchange that the YT Industries restructuring puts it at some risk of loss. Kenstone told the exchange in July that YT owes it NT$180 million (about $6 million at Aug. 14 exchange rates).
