Rising raw material and labor costs as well as the temporary production suspension in China due to Corona lockdowns did impact the gross margin. Profit before tax dropped this year by 5.2% compared to the first half of 2021. However, profit after tax was slightly up by 2.1 percent to TWD 3.62 billion (€ 118.09 million). Giant Group attributed this to the decline in profitability, which also led to reduced tax payable provisions.
Chinese market
The increase in OE business and the recovery of the Chinese market did contribute to the group's sales performance in the second quarter of the current fiscal year, Giant reports. Consolidated 2nd quarter sales was up 6.4% to a total of TWD 22.74 billion (€741.79 million). According to Giant Group, this figure represents a historic quarterly record.
Despite an unstable supply chain and the temporary suspension due to lockdowns of its China factories affecting overall production, the bicycle manufacturer achieved a gross margin of 24.6%, which is a little bit lower than in the second quarter of 2021.. Due to an increase in labor and logistics costs the quarterly profit after tax dropped to TWD 1.8 billion (€ 58.71 million).
Forecast
Looking ahead to the current second half of the year, Giant Group said inventory levels have improved in both the U.S. and Europe. This applies particularly for the entry and mid-range priced bicycles, Giant reports. There would still be bottlenecks for high-end products. With energy prices continuing to rise, Giant Group expects bicycles and e-bikes to remain in high demand. As the forecast was published before the rising tension in the Straits of Taiwan, the impact of the economic sanctions have not been included in the report.
