Amidst COVID-Fueled Demand, Bike Company Shimano Is Shattering Profit Projections

Bike company Shimano (SHMDF) has been a massive beneficiary of the COVID-19 pandemic. 

During the midst of 2020, it was difficult to find a bike to buy almost anywhere in the world - local shops were drained of inventory and service centers had lead times for appointments that were stretching out months; all for an industry that usually stays at a relatively steady ebb and flow. 

Ebike, Emtb, Mountain Bike, Shimano

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Osaka based Shimano, which was founded in 1921, has "hundreds of employees" working "flat out" to try and meet a "voracious" global demand that shows no signs of stopping, according to Nikkei.

Taizo Shimano, the company's president, said: "There is no factory that is not in full operation at the moment." 

The demand has driven the company's sales and profits to record levels; it posted $574 million in net income in 2020, up a stunning 22.5% from the year prior. The company is estimating another jump in net income to about $717 million.

88% of the company's sales came from outside of Japan last year, with Europe being its largest market and accounting for about 40% of its sales. Taizo Shimano is looking to expand the company geographically:  "Asia has two enormous markets, China and India."

Its market cap exceeded that of Nissan last year, the report notes. Shimano says demand "has grown explosively", commenting to Nikkei: "We deeply apologize [for the lack of supplies]. ... We are reprimanded by [bicycle makers]."

He remains unsure whether or not pandemic-catalyzed demand will continue to rise after 2023. Nonetheless, the company is expanding. "There are growing number of people concerned about [their] health," Shimano said, citing a reason as to why the trend could continue. 

Satoshi Sakae, a Daiwa Securities analyst, said: "There is a risk factor, as bicycle demand after the pandemic is uncertain." A second analyst claims that the company "owes much of the rise in the stock price in 2020 to its former president, Yozo." 

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