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Shimano Shares Fall

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BIKE EUROPE, NEW YORK, USA (May 18) – Shares of Shimano Inc. had their biggest one-day drop in more than three years after the company cut its profit outlook on slower demand in China. The shares fell 8.7%, or JPY 300, to JPY 3,160 on the Osaka Securities Exchange, for their biggest drop since Sept. […]

BIKE EUROPE, NEW YORK, USA (May 18) – Shares of Shimano Inc. had their biggest one-day drop in more than three years after the company cut its profit outlook on slower demand in China. The shares fell 8.7%, or JPY 300, to JPY 3,160 on the Osaka Securities Exchange, for their biggest drop since Sept. 21, 2001. The stock was the biggest decliner on the Morgan Stanley Capital International World Index during Asian trading.
Net income at Osaka-based Shimano, the world’s largest maker of bicycle parts, rose 59% in 2004 and 52% the year earlier on the popularity of road racing and mountain-biking, says a Bloomberg report. The company yesterday cut its half-year and full-year profit forecasts, citing slowing bicycle demand in China and elsewhere in Asia, which generates about 43% of sales.
Chinese demand for bicycle parts, which fell in the first quarter, may start to recover as early as July, as accumulated inventories run out and bicycle makers begin to step up manufacturing, Shimano spokesman Ichiro Kawamoto said.
According to Bloomberg, Shimano slashed its net income forecast for the six months ending June 30 to JPY 9.3 billion (US$ 86 million), from its earlier forecast of JPY 10.7 billion (US$ 99.4 million). Shimano also lowered its full-year profit forecast by 6.4 % and its sales outlook by 1.2% to JPY 170 billion (US$ 1.57 billion).
Shimano, which produces 39 %of its products outside Japan, said in February it opened a second plant in China. Shimano generated 85% of its total sales outside of Japan in 2004. Sales in Asia excluding Japan, a market that includes China and Taiwan, accounted for 28.3% of Shimano’s sales last year, up from 27.2% a year earlier. Sales to Europe accounted for 38.9% of revenue last year, it said in a statement in February. When including Japan, Asia is Shimano’s largest market. Europe is the company’s second largest.

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