Shimano’s cycling sales hit record high despite slowing demand

The world’s leading bicycle component manufacturer Shimano published its financial results for 2022 this week, declaring a record revenue of ¥517.4 million, equivalent to around £3.2 billion. This comes despite “the strong interest in cycling during the COVID-19 pandemic showed signs of cooling down”, according to Shimano, who also said strong sales of the new Shimano 105 groupset helped to boost performance in its bicycle component division. 

The Osaka-based manufacturer recorded a sales increase of 16.6 per cent on 2021, which was previously its best year in terms of shipping out bike products, attributed to the boom in cycling during the pandemic.

In the report, Shimano also declared an operating income of almost ¥145,000 million, or £900 million, which eclipses its previous income of £775 million in 2021.

However, the company’s growth was hindered significantly in comparison to 2021, when it posted a record increase of 44 per cent over 2020, along with celebrating its centenary with some snazzy promo books. Nonetheless, Shimano mentioned that the demand for bicycles remained higher than pre-pandemic levels.

> Sales and profits soar at Shimano as demand for bikes remains strong during pandemic

This has been an increasingly visible trend in the bicycle industry since late last year with the world’s largest bicycle manufacturer Giant facing falling demands and rising inventory levels, and Swedish helmet safety company MIPS suffering from a “drastic slowdown in the bike sector” — a notable slump after the incredible boom during the COVID-19 pandemic, which saw retailers like Halfords and Wiggle make massive strides in their sales.

Despite some bike industry forecasts looking bleak going into 2023, Shimano's 2022 financial results should come as a good news for the industry. Another positive slant recently came from the CEO of Pon Holdings, the Dutch conglomerate that owns cycling brands such as Cervelo and Santa Cruz, who called for patience and claimed long-term trends such as increased inshoring would be "incredible for biking" in an interview with Bike Europe. 

Back to Shimano, the company continued in its statement: “In terms of market inventories of completed bicycles, those of high-end class bicycles remained at a low level. Meanwhile, inventory levels of middle-class bicycles rose, following those of entry-class bicycles." 

It went on to single out two products which attracted “brisk” orders in the market: the new Shimano 105 groupset for high-end road bicycles, and its sport e-bike components, STEPS (Shimano Total Electric Power System).

The strong performance of Shimano 105 may come as a surprise to some who may have thought that Shimano making its third-tier groupset electronic and disc brake-only could make it prohibitively expensive; but as we predicted at the time of the launch in June 2022, the product appears to have been a success so far. 

In Europe, the company said that “sales of bicycles and bicycle-related products remained firm, partly backed by strong interest in bicycles”, with albeit somewhat high market inventories. A similar market assessment and sales performance was seen in North America as well.

In Asia and South and Central America, interest and sales cooled off as a result of high inflation, according to the company’s report; although there was still demand for sport and e-bikes in Japan.

> REVIEW: Shimano STEPS E6100

However, Shimano, which also manufactures fishing and rowing equipment, is wary of its sales in 2023, forecasting a total sale of ¥500,000 million, with its bicycle division driving 80% of those sales.

“There is concern that global supply chains will be disrupted by supply constraints and heightened political tension caused by geopolitical risks that have emerged, such as the prolonged situation in Ukraine, and that high inflation dragging on and tight monetary policies adopted globally may put downward pressure on economy,” said the company.

Nevertheless, Shimano is ready to weather 2023 head-on. A company spokesperson said it will “strive to develop and manufacture captivating products that bring sensations to many people, and “continue to create a shared value between corporations and society”... 14-speed, anyone?