Shimano’s first quarter sales worse than expected despite already lowered projections

Japanese manufacturer Shimano has revealed that its bicycle division’s sales have fallen by 17 per cent from last year in the first quarter of 2023, while its operating income in the segment was down 32 per cent, resulting in a worse than expected performance in spite of having predicted a slowdown this year.

The Osaka-based company, which is the leading bicycle component manufacturer in the world, released its financial results for 2023 Q1 this week, in which it was forced to revise its forecast for sales and income for the rest of the year.

Shimano’s revenue from the cycling segment totalled 98 billion yen, or £591 million from January to March in 2023, down from 118 billion yen (£710 million) for the same period in the previous year. In addition, it said its operating income also decreased to 22 billion yen (£133 million) down from 32 billion yen (£195 million).

In February, we had reported that Shimano’s cycling sales had hit a record high in 2022, despite the slowing demand in cycling industry. However, Shimano had said that it was wary of its sales in 2023, forecasting a total sale of 500 billion yen.

In the latest report, the company, which also produces fishing and rowing equipment, has revised its sales forecast down to 460 billion yen, indicating a significant 27 per cent decrease on sales from last year.

Additionally, it predicted its operating income for 2023 to shrink by more than 50 per cent, down to 83 billion yen. In February, Shimano’s income forecast for this year was 105 billion yen, meaning that it has walked back by 20 per cent on its expected results. Although Shimano said that it is optimistic about the long-term prospects of the bike market, it believes current conditions are unfavourable. 

> Shimano’s cycling sales hit record high despite slowing demand

“Although the strong interest in bicycles cooled as progress was made toward recovery to pre-COVID-19 day-to-day routines, interest in bicycles continued as a long-term trend. On the other hand, concerns about economic recession, including rapidly rising inflation, led to a slowdown in sales of completed bicycles, and market inventories generally remained high, despite ongoing supply and demand adjustments,” the company said.

2023 Team DSM shimano groupset

Despite the headwinds in the cycling industry, Shimano’s cycling division was responsible for driving 77 per cent of the company’s total sales, which was 126 billion yen (£75 million), down by 12.5 per cent from last year’s total revenue.

Shimano cited factors like central bank increases in interest rates and the fallout from the ongoing war in Ukraine for weighing heavily on the normalisation of the global economy. In Europe, easing concerns over tight energy supply and demand led to lower gas prices and government measures to address rising prices supported economic activity.

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However, its performance in the European market was strong, with interest in bicycles continuing to be high and retail sales of completed bicycles, especially e-bikes “solid”, according to the company. It also added that market inventories generally remained at high levels, although some high-end models were in short supply.

The rest of the trends did not change much from its previous report, with interest in bikes firm in Asian as well as South and Central American markets but sales sluggish. Sales deteriorated in North America however, with market inventories at a consistently high level. And in the Japanese market, the soaring price of completed bicycles due to yen depreciation and other factors.

The standout products were once again, not different, with Steps, Shimano’s sport e-bike series leading the way, along with the Shimano 105 groupset for high-end road bicycles which was a huge success, as predicted at the time of the launch in June 2022.

> Your complete guide to Shimano road bike groupsets 2023 — Everything you need to know

The news of Shimano’s worse than expected performance was not taken well by the market, with its stock price dropping by nearly 12 per cent across the day of trading on the Tokyo Stock Exchange.

It remains to be seen if a similar fate is to be expected for Pon Bikes — the world’s largest bike manufacturer which is behind brands like Cervélo, Focus and Gazelle. Like Shimano, Pon had a massively successful 2022, with its sales reaching £2 billion, doubling from the previous year.

Pon CEO Janus Smalbraak had earlier called for patience and claimed long-term trends such as increased inshoring would be “incredible for biking”, and this month, we had reported that the company already started the year with full order books for its automotive, bike and equipment & power divisions. So maybe there is hope for Shimano to find its gear in the later half of the year as well?