Shimano has said that the global cycling market remains “weak” as the company revealed that sales of bicycle components fell by a quarter during the opening nine months of the year – and detailed figures published by the Japan-based components giant reveal that sales of bicycle components in the key European market are hardest hit, and are forecast to drop by half in the second half of 2023.
In its third-quarter 2023 financial statement, Shimano – which last month issued a global product recall of 760,000 Dura-Ace and Ultegra cranksets after a reported 4,500 instances of failure – highlighted that new launches this year including the 12-speed 105 and gravel-specific GRX groupsets had met with “a favourable” reception.
However, overall sales within the bicycle components section fell by 24.8 per cent compared to the first nine months of 2022, standing at ¥289,443 million (£1.59 billion). Operating income within the segment fell by nearly half, down 48.8 year on year to ¥55,917 million (£0.31 billion).
The company’s other major product segment, fishing tackle, saw sales edge upwards by 3.4 per cent to reach ¥85,472 million (£0.47 billion), with operating income of ¥16,200 million (£0.09 billion), down 7.3 per cent on the previous year.
Group sales for the period were ¥375,264 million (£2.06 billion), down 19.7 per cent on the first nine months of 2022, generating operating income of ¥72,086 million (£0.4 billion), a decline of 43.8 per cent.
Shimano said that the global economy remains “lacklustre” due to factors including the ongoing conflict in Ukraine, as well as rises in interest rates imposed by central banks to try and curb inflation.
Due to its strength in componentry, Shimano is something of a bellwether for the cycling industry as a whole, and despite posting record sales last year has previously cautioned that the growth driven by the boom in bicycle sales at the height of the coronavirus pandemic would be unsustainable in the coming years.
One of the effects of that is that that levels of inventory were higher than usual, a situation that still subsists according to Shimano’s third-quarter financial results, released today.
A separate detailed breakdown of its turnover by business segment and geographical market reveals that after a fall of 16.7 per cent in Europe – a market that in 2022 made up 57.1 per cent of total segment sales – during the first six months of 2023, bicycle component sales there are forecast to fall by 50.2 per cent in the second half of the year.
Commenting specifically on the cycling segment which accounts for a little over three quarters of its total revenue, the business said: “Although the strong interest in bicycles [during the pandemic] cooled down, interest in bicycles continued to be high as a long-term trend. On the other hand, market inventories generally remained high, despite ongoing supply and demand adjustments.
“Overseas, in the European market, the strong interest in bicycles continued in our major market, namely, Germany and Benelux countries, and retail sales of completed bicycles were strong. Market inventories, however, remained at high levels.
“In the North American market, retail sales of completed bicycles remained weak and market inventories were at a consistently high level, despite some progress in inventory adjustment.
“In the Asian, Oceanian and Central and South American markets, although interest in bicycles was firm, retail sales of completed bicycles remained somewhat sluggish due to cooling consumer confidence on account of rising inflation and economic uncertainty, and market inventories were at a high level. However, in the Chinese market, sales remained strong, especially for road bikes, owing to the continued popularity of outdoor sports cycling, and market inventories remained at an appropriate level.
“In the Japanese market, retail sales were somewhat sluggish as affected by the soaring price of completed bicycles due to yen depreciation and pullbacks in consumer spending and market inventories remained somewhat high,” the company added.
Despite its financial performance, Shimano’s shares rose 3.95 per cent in trading on the Tokyo Stock Exchange, although they remain 39.3 per cent below the all-time high of ¥35,470 (£195.15) achieved in July 2021 when the benefits of the pandemic-driven boom were at their height.
Shimano, easily the biggest of the major groupset brands, continues to introduce components that have been well-received by both the cycling press and consumers.
The Shimano 105 R7100 Di2 groupset that was introduced in the summer of 2022 has proved to be immensely popular, as has the mechanical version that was launched at the end of August this year. Shimano has also unveiled new cross-compatible CUES groupsets for city, touring and mountain bikes, consolidating Claris, Sora and Tiagra, which could be a game changer for both bike shops and consumers.
Over on the gravel side of things, Shimano has recently released mechanical 12-speed GRX components which should consolidate its position in that market.
On the downside, many brands have reported long delays in receiving Shimano products with updated delivery dates only communicated days before anticipated arrival, in many cases.
Then, of course, there has been the Shimano 11-speed crank situation over the past few weeks. A voluntary inspection and replacement recall notice for 760,000 Dura-Ace and Ultegra bonded 11-speed road cranksets was announced in North America at the end of September while a safety inspection and replacement programme is being implemented in other territories.
The monetary cost of this is likely to be immense, as is the damage to Shimano’s reputation for reliability.
Simon joined road.cc as news editor in 2009 and is now the site’s community editor, acting as a link between the team producing the content and our readers. A law and languages graduate, published translator and former retail analyst, he has reported on issues as diverse as cycling-related court cases, anti-doping investigations, the latest developments in the bike industry and the sport’s biggest races. Now back in London full-time after 15 years living in Oxford and Cambridge, he loves cycling along the Thames but misses having his former riding buddy, Elodie the miniature schnauzer, in the basket in front of him.