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Shimano: Low-End Sector Reached Bottom

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Component maker Shimano reports that after a significant drop in the demand for bicycles in the popular price zone reflecting weak consumer confidence amid the global economic crisis, the decline in demand appeared to have bottomed out. However Shimano notes that it will take some time to reduce inventories as shipments of the products in the

Shimano: Low-End Sector Reached Bottom

OSAKA, Japan – Component maker Shimano reports that after a significant drop in the demand for bicycles in the popular price zone reflecting weak consumer confidence amid the global economic crisis, the decline in demand appeared to have bottomed out.

However Shimano notes that it will take some time to reduce inventories as shipments of the products in the popular price zone did not pick up.

Shimano made this statement together with the publication of the financial results for the first half of 2009. During this period Shimano saw an even larger decline of net sales and operating income as reported earlier in its outlook for 2009.

In the first half of 2009 consolidated net sales decreased by 15.7% to JPY 90,057 million (€ 620 million) related to JPY 115,497 million (€ 795 million) during the period January – June 2008. In the same period the operating income plunged by 36.3% to JPY 8,619 million while the net income fell short at JPY 6,565 million (€ 45 million).

Though the bike segment is still the most important part of Shimano’s activities, it is less profitable than the fishing tackle and other business divisions. In the first half of 2009 the consolidated net sales of the bicycle division declined by 23% while the operating income plunged by 52%.

Nevertheless, consumer demand for mid-range and high-end sports bikes 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 Shimano’s mid-range and high-end products remained at relatively low levels.

Although Shimano clearly indicates that the decline in the low-end market has come to an end, the Japan based component maker did not give an outlook for the second half of 2009.
 

* Please note that Shimano Inc. has announced figures in JPY currency only. EUR equivalent amount is calculated by up-to-date exchange rate for the reference, the company assumes no responsibility for this translation or for direct, indirect or any other forms of damages arising from the translation.

 

 

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