In its trading update for the full year of 2020 Shimano has chalked up a 2.7% growth in its cycling division, equating to an 18% uptick in operating income.
The question on everyone’s lips, when might supply normality resume, is oddly not addressed in the financial statement’s forecasting, though there is an indication that the business expects to do well in 2021 with a 20.5% increase in new sales predicted.
This bumper year of growth is expected to come from particularly strong H1 orders, which the firm will already have good insight on. Demand for Shimano parts in what will be its centenary year are likely to be running at a record high with shortages well documented and a sustained growth in electric bike investments creating a fever pitch of investment around the industry.
In 2020, sales in the first half took a hit, down 15%, but this time around a 48% increase to a value of 237.7 billion yen is anticipated.
While skirting detail on supply and demand the forecast did offer some insight into how the business views various global opportunities and threats. The statement offered:
“Although there are some promising signs of economic recovery such as the start of vaccinations to prevent the spread of COVID-19, uncertainties remain over the full-scale recovery of economic activities. Meanwhile, with a view to preventing the spread of COVID-19, interest in outdoor leisure activities that can avoid closed, crowded and close-contact environment is expected to continue.
“In Europe, economic turmoil caused by Brexit is expected to be avoided by agreement to conclude a free trade agreement. In China, the impact of COVID-19 will ease, and the economic recovery is expected to continue, driven by personal consumption. In the U.S., the Biden administration came to power, and additional financial support by the government is expected. However, social instability due to political division may discourage economic recovery. In Japan, as infection trends directly affect consumer sentiment and concerns prevail over the impact on the holding of the Tokyo Olympic and Paralympic Games, decline in consumption will not be fully recovered and the pace of economic recovery is estimated to be moderate.”
Broken down by continent Europe and North America were described as “robust” and the components giant does here address shortages, offering “as the inability of supply to keep up with the strong demand continued, trends of shortages in both distributor inventories and retail inventories persisted in each country.
“Under these market conditions, order-taking was brisk for the new Deore MTB components and a wide range of existing products overall.”
As Covid-19’s affect on the business became clear in the summer of 2020 Shimano did issue a statement within its Q1 2020 results that suggested a “rethink” of its supply chain’s functionality may be due, but the listed components maker, which has around 70 to 80% market share, has been relatively tight-lipped since on public statements on what may change.
Overall Shimano recorded a net sales increase of 4.1% from the prior year, tallying 378,040 million yen. Operating income increased 21.6% to 82,701 million yen, ordinary income increased 17.3% to 81,471 million yen, and net income attributable to owners of parent increased 22.5% to 63,472 million yen.
For a full picture of the overall business, including a deep dive into the income statement, head here.