News Article

Shimano Vigorously Investing in Disappointing 2016

Home 2078

OSAKA, Japan – Shimano booked a 17.4% drop in net sales made with bike products in 2016 compared to 2015. This is in the company’s 2016 financial report which was published last Tuesday. Despite the drop in sales Shimano made ‘vigorous investments’ in its manufacturing capabilities in Japan as well as overseas.

Shimano Vigorously Investing in Disappointing 2016
Shimano’s facility in Czech Republic. – Photo Wikimapia

The statement on investments in new factories is part of an account on Medium- to Long Term Management Strategies in the 2016 financial report. It notes three key strategies, “to realize our vision that is to be a ‘Value Creating Company’”. The three key strategies are:

  • Strengthening core competence and focus on the market.
  • Creating new bicycle and fishing cultures and enhance the brand power.
  • Increasing corporate value.

Manufacturing capabilities

Based on these key strategies Shimano says to have realized, “A dramatic improvement of development efficiency by the introduction of digital devices, construction of state-of-the-art factories at Sakai and Shimonoseki to reinforce manufacturing capabilities in Japan and establishment of new factories overseas and expansion of overseas factories to meet expanding demand for sports bicycles worldwide. We have engaged in vigorous investment focused on the objective of each initiative.”

Sales drop

These ‘vigorous investments’ are made by Shimano in a year that, to say the least, must have been disappointing for the world’s biggest bicycle parts maker. As said net sales made with bicycle products dropped by 17.4%. Including the company’s fishing tackle business as well as others, total net sales for the Shimano Group stood at JPY 322,998 million (€ 2.7bn); down 14.7% on the 2015 result. Operating income decreased by 24.1% to JPY 64,546 million (€ 535mn) while net income dropped 33.1% to JPY 50,964 million (€ 422mn).

No losses in 40 years

That Shimano is capable to implement the ‘vigorous investments’ must be regarded in the light of what was recently stated in an extensive report by Credit Suisse. This financial specialist reported that Shimano not had a single operating loss in over 40 years! Next to that the Credit Suisse report mentions a Shimano CEO statement at a recent financial analyst briefing saying that the company is “favoring JPY 200bn (€ 1.7bn) as the optimum level for cash and equivalents.”

Shimano in Europe

Whether the investments in Shimano’s manufacturing capabilities have also been made in Europe is not clear. However, the company already owns a production base in the Czech Republic. Here 7-speed internal gear hubs are produced.

By the way Europe is by far the biggest market for Shimano. According to the mentioned Credit Suisse report Shimano makes 57% of its business in Europe; 18% in North America, China accounts for 7% of the Shimano business, Japan for 6% and others for 13%.

For 2017 Shimano forecasts an increase in net sales of 2.2%.

 

* 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.

Comment on this article

Related tags

Before commenting read our rules on posting a comment.