The difficulties facing seemingly all corners of the cycling industry in 2023 appear to show no signs of relenting, with Shimano today reporting a 17.7 percent fall in sales of bicycle components for the first half of the year and a 40 percent drop in operating profit.
Following a record year in 2022, the Japanese brand’s predicted slowdown for 2023 has proved even sharper than expected. According to today’s report, net sales in the brand’s bicycle division fell to ¥205 billion (around £1.1 billion), while the company’s operating profit fell by around £230 million (39.5 percent).
Shimano, the world’s largest manufacturer of bike components, says the figures – which have forced the company to revise its forecasts downwards for the second financial quarter in a row after a sluggish start to 2023 – are a result of “weak” demand for its products in key markets across the world.
In Europe, the company says, demand for complete bikes was “somewhat low” and industry inventories “remained high”, a result Shimano claims is partly due to “unfavourable weather conditions in early spring”.
A similar story appears to be the case in the North American market, where Shimano says “retail sales of completed bicycles remained weak and market inventories were at a consistently high level”.
“Sluggish sales” in its Asian, Oceanian, and Central and South American markets, meanwhile, were attributed to a lack of consumer confidence due to rising inflation, with interest in bikes nevertheless remaining “firm”.
The company also noted that the continuing production cutbacks at factories are making it “difficult” to absorb the rise in manufacturing costs.
After recording a record revenue of £3.2 billion in 2022, two consecutive quarters of falling sales this year has again prompted Shimano to revise its forecasts for 2023. The Osaka-based brand now says it is expecting sales of ¥450 billion (£2.48 billion) for the year, which would mark a 40 percent fall on its 2022 sales. That figure is also down from the ¥460 billion (£2.53 billion) forecast at the end of the first quarter, which itself was below the ¥500 billion in sales expected at the start of the year.
These downward trends were reflected on the Tokyo stock market, where Shimano’s shares fell by 3.8 percent on Wednesday, after dropping by 5.8 percent when the figures were initially released.
However, Shimano remains confident about the long-term success of the cycling industry, as it experiences a slowdown in the wake of the Covid-19 lockdown-influenced boom of recent years.
“Although the strong interest in bicycles cooled down as progress was made toward recovery to pre-Covid-19 day-to-day routines, interest in bicycles continued as a long-term trend,” the company said in a statement today.
The cooling demand, delayed fulfilment, and high inventory levels cited by Shimano have affected nearly all sections of the bike industry during a difficult 2023.
Last week, UK-based distributor FLi ceased trading with immediate effect, with director Colin Williams citing the impact of Brexit, the complexities and restrictions surrounding UK and EU trading, and the difficulties facing the industry in the post-Covid lockdown period as the main reasons behind the distributor’s demise.
Meanwhile in May, Livingston-based distributor 2pure entered administration, just months after the company announced that it was restructuring to focus solely on the cycling industry, following what it described as a “highly volatile” 2022 caused by macro-economic events in the wake of the Covid-19 pandemic and Russia’s invasion of Ukraine.
And in March, Moore Large, the leading UK distributor for well-known brands such as Tern Bicycles, Lake, Forme, ETC, Emmelle, and MeThree, entered liquidation, leading to its £35 million product inventory being auctioned off.
Ryan joined road.cc as a news writer in December 2021. He has written about cycling and some ball-centric sports for various websites, newspapers, magazines and radio. Before returning to writing about cycling full-time, he completed a PhD in History and published a book and numerous academic articles on religion and politics in Victorian Britain and Ireland (though he remained committed to boring his university colleagues and students with endless cycling trivia). He can be found riding his bike very slowly through the Dromara Hills of Co. Down.