Shimano reports 55% drop in profit for 2023, amid $18m bill for global crankset recall

The world's biggest bicycle component manufacturer, Shimano, has released its financial figures for 2023, detailing ‘extraordinary losses’ relating to the high profile worldwide crankset recall of ¥2,762 million, roughly equivalent to $18.5 million, or £14.5 million. This follows the financial report for the first half of 2023, which detailed a 40% drop in profit for the Japanese giant.

While the crankset recall has been costly, it is worth noting that the company as a whole still reported a net profit of ¥61,142 million ($406 million, or £322 million). This therefore makes the crankset recall responsible for 22% reduction in the company’s profits vs the total without the cost of the recall. The total drop in net profit versus the previous year is 55%.

Parking the cost of the worldwide recall, the company’s sales figures were also down 24%. Despite the negative figures the company remains buoyant in its outlook, reflecting a change from previous years. 

Relating to the bicycle components wing of the business, rather than the whole entity (as Shimano also produces fishing equipment, though not on nearly the same scale), it states “Although the booming popularity of bicycles cooled down, interest in bicycles continued to be high as a long-term trend.”.

While this is an optimistic opener, the company acknowledges the prevailing market conditions near-worldwide in the post-pandemic era, namely high levels of stock combined with waning sales figures, despite high interest in bicycles. While Germany and Benelux performed well, “in other countries, consumer demand waned on account of inflation and an economic slowdown, and market inventories remained at high levels.”

This performance in ‘other countries’ was reflected in North America, Asia, Oceania, and Central and South America. Bucking the trend was the Chinese market, where “sales remained strong, especially for road bikes, owing to the continued popularity of outdoor sports cycling, and market inventories remained at an appropriate level.”.

A murky future

Reporting of annual results is usually followed by predictions for the future. In this case, Shimano predicts a further 11% drop in sales and a corresponding 11% drop in profits for 2024. 

These figures are prefaced by the catch-all caveat of global geopolitical uncertainty. 

“The prolongation of the situation in Ukraine and growing tension in the Middle East, may disrupt global supply chains and put further downward pressure on economy. In addition, the outcomes of elections scheduled in major countries and regions in 2024 and changes in interest rate policies in various countries may affect the economy.”

Close to home, for the majority of our readership at any rate, Shimano outlines its feelings for Europe and North America:

“While monetary tightening adopted mainly in Europe and the U.S. are showing signs of easing, it is expected in Europe that personal consumption will recover thanks to declining inflation rates and improvement in the employment environment, leading to moderate economic recovery. Meanwhile, in the U.S, there is concern that the presidential election in 2024 may influence the economy.”

It is rare to conclude a story on the finances of a Japanese bicycle component manufacturer with a reference to the 2024 presidential election, but such is the all-encompassing influence of Trump v. Biden.