Shimano’s 2023 sales decline, but long-term outlook positive

Shimano's 2023 sales decline, but long-term outlook positive

In 2023, Shimano Group’s sales performance declined sharply, with a 30% decline in sales and an even steeper 52.3% year-on-year decline in net profit.

The decline in Shimano’s business results coincided with the development of the global bicycle market(e-bike market), where the business of bicycle manufacturers and their components has generally suffered under the dual dilemma of changing consumer demand and high inventories in the supply chain.

According to Shimano’s 2023 financial report, the company’s bicycle business saw a 24.6% year-on-year decline in revenue, a more than 50% drop in net profit, and an unpromising sales outlook for 2024, with no significant growth expected.

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    Sliding financial results

    As one of the top 12 electric bike manufactures in Japan, Shimano’s difficulties were mainly due to high market inventories and continued weak demand, resulting in a 29.5% year-on-year decline in net sales to €2.26 billion, while operating income was down 52.3% to €405 million.

    However, Shimano’s sales are still significantly above pre-epidemic levels, with Shimano posting net sales of €1.85 billion for bicycle components in 2019, also reflecting its resilience in the face of challenging market conditions.

    Shimanos 2023 sales decline but long term outlook positive 3

    Long-term trend of declining revenues

    Despite the short-term challenges, Shimano remains optimistic about the long-term trends in the bicycle market.

    The company believes that despite the slowdown in market growth, interest in bicycles remains high and that interest in bicycles is not limited to major European markets such as Germany, the Netherlands and Belgium, where demand remains strong despite the current impact of inflation and economic slowdown.

    For 2024, Shimano expects further sales declines, particularly in bicycle components, from €2.26 billion in 2023 to €2.02 billion in 2024.

    High inventory levels in Europe mean that this part of the market will suffer the greatest decline. For Europe, Shimano expects sales in 2024 to be 18% lower than in 2023, but still above 2019 levels. Who are the top 10 bike parts manufacturers in Europe?

    Shimanos 2023 sales decline but long term outlook positive 4

    Strong sales in China

    High inventory in the market was a major factor in Shimano’s sales decline.

    Rising inventory levels have slowed sales, placing greater demands on the company’s cash flow and inventory management.

    In the bicycle industry, where product replacement is rapid, excess inventory could lead to greater depreciation and lower sales prices, further squeezing profit margins.

    However, Shimano’s sales performance in China remained strong due to the continued popularity of outdoor sports cycling, especially road bikes, and market inventories were kept at moderate levels. You can also check the top 20 road bike brands in the world for your reference.

    While high global inventory levels were the main reason for the sales slowdown, Shimano’s strong performance in China offers a glimmer of hope.

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    Geopolitical risks affect the market

    Geopolitical risks are also a non-negligible factor affecting the market, e.g. continued tensions in Ukraine and the Middle East could disrupt global supply chains and put further downward pressure on economic growth.

    In addition, the 2024 election calendar could have an impact on interest rates in various countries, further adding to market uncertainty.

    Shimanos 2023 sales decline but long term outlook positive 2


    In summary, although Shimano Group is facing a decline in financial performance in 2023, the company remains positive on the long-term market, with sales set to decline further in 2024, especially in Europe, while a strong sales performance in China may be a respite for the business.

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