TOKYO (BRAIN) — Shimano says soaring raw material costs due the Middle East war may force it to slightly raise prices on bicycle components next month.
The company said the war poses little threat to its revenues, as Middle East sales are less than 1% of its business.
But increased procurement costs, the cost of securing alternative raw materials, and rising sea and air freight rates, all due to the war will result in higher production costs. “A portion of these cost increases will be passed on to selling prices,” the company said.
Shimano said the extra costs will amount to an estimated 4.0 billion yen ($24.4 million) in net revenue for its full fiscal year (all in the second half) due to “soaring raw material prices and price increase requests from suppliers” It said it would partially offset the cost increase by passing through a price increase on components, resulting in an estimated extra 2.0 billion yen in net sales revenue in the second half of the year. It said the price increase will start in August.
The statement did not mention any possible price increase in its fishing division, probably because of the bike division’s more significant use of raw aluminum and other metals
Shimano has revised up its estimated net sales in the bike division for the full year by 4.9%, to 367,000 million yen.
A 2 billion yen price increase across estimated bicycle-division sales of 202,000 million yen in the second half would be a 0.99% increase.
Sales flat in the first half; income up
Sales in the bike division were 181,379 million yen ($1.11 billion) for the half and operating income in the division decreased 15% to 20,064 million yen.
However, depreciation of the Japanese yen relative to other currencies resulted in a net income increase of 605.5% to 27,950 million yen. The yen has fallen over 10% relative to the U.S. dollar and 8% to the euro in the last year, 14% to China’s yuan.
As for sales performance, the company said, “In the North American market, while retail sales of completed bicycles remained weak due to the impact of an uncertain economic outlook and stubbornly high prices for completed bicycles as a result of tariffs, market inventories remained at an appropriate level.”
Speaking about its business across all its divisions, Shimano said "In the U.S., the previously strong economy came to a standstill amid lackluster personal consumption due to price increases resulting from tariff policies, despite signs of recovery in the employment environment."
While bike division sales were flat, Shimano’s fishing division sales were up 17.4% to 65,466 million yen, contributing to a company-wide net sales increase of 4.1%, to 247,059 million yen. Operating income decreased 3.1% to 27,249 million yen. Company-wide the exchange rates caused an ordinary income increase 151.6% to 35,324 million yen.
