TAICHUNG, Taiwan (BRAIN) — Giant Manufacturing, a bellwether company within the industry's manufacturing sector, reported a 7.4 percent decline in revenue to $887.9 million through the first half of the year.
And net after-tax income also posted a significant drop to $39.3 million, a 29.5 percent decline, due primarily to unfavorable exchange rates, Giant said in a statement. For example, over the first half of the year the U.S. dollar had strengthened against the NT, up about 7.5 percent as of June 30.
Giant's first half report follows on a weak 2016, when it posted annual revenue of NT$57.09 billion, a 5.5 percent decline from 2015.
Nonetheless, Giant executives are modestly bullish about the remaining year. "Our own brand performance, both in Europe and in the U.S. market, have reported double-digit sales growth in local currency," Giant said.
In Europe, continued demand for e-bikes is driving sales. In the U.S., sales remain focused on mountain bikes and road bikes with growth in both units sold as well as dollars, the company said.
Giant has introduced its 2018 e-bike line to dealers in the North American market and the overall reaction has been positive, the company said. With model year 2018 products in the market, Giant is positive about its growth prospects for Europe and the U.S.
The weak link in global sales for Taiwanese companies, including Giant, remains China. "Giant China's performance continues to suffer from soft demand and the popularity of bike sharing, which affected sales recovery in the first half," Giant said.
China's infatuation with bike sharing has forced companies like Giant and Merida to close some company-owned stores as retail sales have plummeted, particularly for higher end models. Independent shops have also been hurt by a lack of demand brought on by bike sharing.
Still, Giant said it believes its co-sponsorship of pro-cycling's Team Sunweb, and its performance in the Tour de France and the Giro d'Italia, has elevated its global brand awareness and will drive future demand, especially for its carbon frames and accessories.
"Looking forward to the second half of the year, Giant projects Europe and the U.S. will continue its growth momentum," the company said. However, it cautioned that unpredictable exchange rates as well as continued turmoil in the Chinese market would be of concern for the remainder of the year.
"Nevertheless, Giant remains positive about its global position and manufacturing advantage and will be able to meet any challenges," the company said.
However, Giant, like other industry manufacturers listed on Taiwan's stock exchange, has seen its per share price generally decline through the first half of the year. Giant's stock opened in early January at NT$205, closing June 30 at NT$174—a 15.1 percent drop. And by mid-August it was trading at NT$155 per share.
Merida Industrial, a key competitor, saw its share price fluctuate throughout the first half, closing up 19.9 percent on June 30 to NT$163 from NT$136. But it had fallen sharply back to NT$136 by mid-August.
