After downgrading its financial forecast two months ago, Shimano’s challenging 2025 continues, with the components giant reporting a steep drop in profit, despite sales improving modestly during the first nine months of the year, as the ongoing headwinds battering the cycling industry continue to bite.
According to its latest accounts, Shimano’s bicycle components division generated 266,243 million yen (just over £1.3 billion) in sales between January and September 2025, up five per cent compared to the same period last year.
The company’s operating income level, meanwhile, dropped 27 per cent to 30,161 million yen (just under £150m), indicative of weaker margins and the persistent inventory challenges facing the brand.
BikeEurope has reported that in certain key markets, Shimano – the world’s biggest manufacturer of bicycle components – reported that inventory levels have remained relatively high. For instance, while stable weather conditions helped bolster sales of completed bikes in Europe, market inventories nevertheless were reported to be on a “somewhat high level”.
High inventory levels are also prevalent in the Chinese market, where cycling-for-sport retail sales have stagnated, while in Japan soaring prices of completed bikes have also caused sales to slump. However, Shimano says inventories in their home market were maintained at an “appropriate level”.
Slowing sales and weaker retail demand were also reported in Asia, Oceania, and Central and South America, though these trends were offset by improving inventory figures.
In the North American market, which have proved especially volatile in the wake of US president Donald Trump’s controversial tariff policies, Shimano reports that “retail sales of completed bicycles remained weak due to an uncertain economic outlook, but market inventories maintained appropriate levels”.
Reflecting on the state of the global economy so far this year, the company added: “Views on the economic outlook continued to be cautious due to changes in trade policies around the world and rising geopolitical risks caused by prolonged international conflicts.”
Foreign exchange fluctuations, meanwhile, represent one of the biggest culprits for Shimano’s profitability struggles this year, the brand recording 18,387 million yen (£91 million) in foreign exchange losses, double the loss recorded in the same period last year.
Attributing its overall valuation loss to foreign exchange and net income decreases, Shimano says it is sticking to its forecast for the year, which it downgraded in August, with a two per cent revenue increase, a 29 per cent decrease in operating income, and a 60 per cent decrease in net income compared to 2024.
The latest accounts come less than a month after the Japanese Fair Trade Commission ruled that Shimano had violated the Subcontract Act by failing to pay its local subcontractors for storing materials on its behalf.
In a statement released last month, Shimano said it is taking the Fair Trade Commission’s recommendation “seriously” and has already paid compensation to some of its 121 sub-contracting companies affected by the violation.
In a press release, Shimano said it “sincerely apologises for any concern or inconvenience”, the Fair Trade Commission in its home country of Japan notifying the company of concerns over details relating to outsourced manufacturing.
In total, 121 companies were affected, Shimano explaining how the manufacturing of “certain product parts” are outsourced to subcontractors, with moulds and other equipment lent from Shimano to these other companies.
The Fair Trade Commission questioned Shimano requiring subcontractors to store the lent equipment free of charge and conduct inventory checks to verify the mould and manufacturing equipment’s condition, even without orders for parts “over an extended period of time”.
It all relates to manufacturing since 1 December 2023, the press release suggesting the number of relevant moulds and pieces of equipment is 4,313 in total, at 121 companies.
Shimano apologised and said it takes the violation “seriously”, the board of directors explaining they will take steps to ensure the company does “not request unjust economic gains and harm the interest of subcontractors in the future”.
As part of this process, Shimano said internal compliance training would be reviewed and verification systems “strengthened”.
The news also comes after Shimano recently granted a preliminary approval of the settlement regarding a class action lawsuit filed by crank-owners in the US over the inspection programme and recall.
22 thoughts on “Shimano profits plummet despite modest sales growth, as components giant blames cycling industry challenges, inventory issues, and foreign exchange losses”
Hey Shimano, how about you
Hey Shimano, how about you stop focusing on electronic groupsets, and return to innovating on the mechanically actuated groupsets that most people seem to want to use?
What exactly would you like
What exactly would you like to see them improve? How, in your opinion, could they innovate on mechanical groupsets?
They are already as light as the materials allow, robust and reliable. The biggest (though rather minor nowadays) issue is still front shifting, but that cannot be easily improved exactly because it is a mechanical system – you can’t get the FD to push the chain harder as the human hand only has so much strength. An electric system provides the extra power needed for smoother shifts up front.
There really isn’t much more to innovate on here. Mechanical systems have become so easy to make that Chinese manufacturers are already biting into that market and it was the only logical decision by Shimano to leap ahead and venture into the world of electronic shifting.
Not that I like it, but without innovation you lose market share as your competitors copy your ideas. Mechanical systems do have their place in the ecosystem (thank God for that!), but Shimano had to branch out into a new territory to avoid fighting with cheaper manufacturers consistently catching up with them.
Defeatist talk! The same
Defeatist talk! The same could have been said when friction shifters were the mature technology. You certainly don’t innovate from a position of assuming that the current state of the art can’t be improved.
It’s not proven that today’s materials or designs are the best possible, or couldn’t be put to better use. It’s not proven that shifting couldn’t be improved. To take your example of front derailleurs, if the force available isn’t enough when applied in a straight 1:1 movement (which isn’t proven), then it could be improved by optimising how leverage is applied, with more at the points in the stroke where resistance is highest.
Giving up on mechanical innovation is a choice. Yes, if what you’re doing is easy then everyone will copy it. One option is to quit; the other is to try harder.
DJameson wrote:
The problem is, with friction shifters you clearly felt the inaccuracy of the derailleur. With current systems your only argument is “but I want it better” without even being able to specify what kind of inconvenience you are facing. You do like the product but just complain for the sake of complaining.
If a random Chinese company can reproduce your work in a jiffy, it clearly means that the product is not advanced. Especially if it takes years to “innovate” (without really introducing major changes) on the XTR level, which only shows how difficult and pointless it is to come up with anything new within this realm.
You can’t invent a new mechanics for levers. You can’t find better aluminum if that’s what the aerospace industry is using. Again, you’re complaining just for the sake of complaining, without an actual problem to solve. This is not how innovation works.
Seriously, haven’t you heard of different pull rations having been proven over the last few decades?
And then there is the third way, which is to take a completely new approach instead of spending millions on developing a cul-de-sac technology when a new alternative is available. Welcome to electronic shifting, which – whether you like it or not – was the biggest game changer of this century in terms of shifting performance. And I do say it as a non-user – I will abstain for as long as I can (that’s why I called mechanical shifting a cul-de-sac technology, not an obsolete one), but you can’t deny the huge change it brought about.
tomlew wrote:
That doesn’t follow at all. It clearly means that Chinese companies have top-notch industrial espionage (often state-sponsored/assisted) and capacities to replicate manufacturing technology at an incredible rate. In any case, just because a technology is easy to replicate it doesn’t mean it can’t be exceptionally advanced as well; Gutenberg’s printing press, to take a random example, was a very simple machine and easy for any moderately-skilled craftsman to copy and at the same time an incredible advance.
EDIT – just noticed you have
EDIT – just noticed you have me covered. Indeed – there is much in human affairs that is far easier (even if not trivial) *once it has been done*.
(Not quite the same but I like the quote about Shakespeare being the best storyteller in the English language *as long as someone else had told it first*).
Rendel Harris]
Or it means that the industry as a whole has developed so much that it just doesn’t make sense to invest ever-increasing amounts of money in ever-decreasing returns. Innovation is a business-driven decision, it must give a return on investment.
Sure, but then it was made obsolete overnight when a new technology arrived. At some point it became obvious that a new technology had emerged which made arranging metal blocks manually pointless. Nobody kept innovating in a cul-de-sac area when the new technology was obviously superior and thus the printing press was phased out without government incentives.
The same may happen to bikes if electronic shifting becomes cheap and convenient enough. Until it does, both technologies will coexist, but market leaders with expertise will not invest much in a cookie-cutter technology.
Erm…manufacturers aren’t
Erm…manufacturers aren’t known for making products that people don’t want. So the reason Shimano et al make electronic gruppos is that there’s a market for them.
Also: Cues, much?
I feel like this is the route
I feel like this is the root cause of the falling profits – most people don’t want to buy Cues. It’s going on full builds, but that market has slumped post-Covid boom, because there’s just an excess of bikes out there which nobody wants to ride. I don’t know many people who would buy cues as an upgrade/add-on, because it’s fundamentally utilitarian – if that’s the level of kit you’re riding, you’re probably not that interested in upgrading/replacing parts on a bike unless it’s broken.
Re. electronic gruppos, great if you have pots of money, but as noted above, current mech groupsets are very mature. R7000 105 was pretty much perfect when set up correctly. 12 speeds would be nice, but is so not essential, I’m not going to invest in it until my current groupset cannot be maintained.
I think the real issue is that they made it too good. Nobody’s going to upgrade a groupset that works and, for 90-odd% of riders lasts a lifetime. My current R7000 has over 20,000km on it on a commuter/all-weather bike. I’ve just replaced the jockey wheels and chainrings for the second time, but everything else is original (bar sundries like brake pads/discs/chain). I’ll only replace it when Shimano stop manufacturing spare parts.
Very erudite. …and when is
Very erudite. …and when is the bike industry going to stop whinging about the covid boom? …when millions of people (including Shimano customers) had their livelihoods smashed by covid, and therefore cannot afford a new bike – as a direct result of on going inflation caused by the covid boom!!
Very erudite. …and when is
Very erudite. …and when is the bike industry going to stop whinging about the covid boom? …when millions of people (including Shimano customers) had their livelihoods smashed by covid, and therefore cannot afford a new bike – as a direct result of on going inflation caused by the covid boom!!
Nothing to do with their
Nothing to do with their shoddy quality of crank manufacturing/glueing then?
They are suffering like most
They are suffering like most companies. People in “rich” countries have less and less to spend on non-essentials because all their salaries are being sucked up by the basics and housing. China is coming into the market in strength and you simply cannot compete with them on cost. Then there is the fact that cycling is constantly riding into a headwind when it comes to popularity and uptake because its become massively politicised and used as yet another lightning rod by the right wing to provide a scapegoat for the issues of society.
Cycling components are
Cycling components are clearly not ‘ non essential’ to some, bicycles and everything that goes with them is absolutely essential, ie – non car owners of which there are probably more than you may think, the bike is their main/ only form of transport?
You might be right, but it’s
You might be right, but it’s beside the point. Whilst cycling components are pretty essential to some people, I think it’s clear from Shimano’s own reporting that a lot of their sales are to purely/largely recreational cyclists, and therefore if those sales are being squeezed, so too is Shimano’s profit.
Or even if you use a bike as your main form of transport, if your budget is tight you might choose cheaper components, either from lower tiers of Shimano (presumably less profitable?) or even look to other brands. It is not essential to have Ultegra on your commuting bike, no matter how nice it is!
I expect that gobally,
I expect that gobally, Shimano’s biggest products are equipment from Deore level and below, and CUES. The stuff that’s used on mountain bikes, hybrids, and trekking bikes. And their biggest customers are technically bicycle manufacturers, not cyclists. So if the bike manufacturers are overstocked Shimano are well and truly f*cked.
KDee wrote:
And that is pretty much correct. What we see as “retail” products in shops is very different from where the money is – which for manufacturers is the OEM market. CUES will sooner or later catch up with Tourney or Alivio, but for now they are mainly sold on new bikes and will be needed as replacements only after some time.
BTW aftermarket products are in large part a PITA, not a real profit driver, especially with a product range as wide as Shimano’s. That’s exactly why CUES was concocted – to simplify the range and boil it down to just a few relatively unified groups.
And Deore and above? Well, Deore is the staple upper-tier group, but anything above is made mainly for company image. There is no real money there. I remember reading once that Shimano hardly break even on XTR or Dura-Ace, the main benefit there is the perception of the brand as the market leader and marketing coverage via race bikes.
I would suggest that is a
I would suggest that is a tiny tiny fraction of the population and the vast majority of people I see outside of recreational cycling are on shitty e-bikes that the likely just replace once they fall apart on them after a few years.
I don’t live in London so perhaps there is more of a market for components but around here its people on crappy halford specials that have never shown their bike the pointy end of a chain lube dispenser and people doing delivery riding on sketchy ebikes.
True, but your commuters (of
True, but your commuters (of which I’m one) would be ill advised to put down 4k for the latest SRAM Red wireless miracle. Or its Shimano equivalent, which I guess would be dura-ace (I’m a SRAM guy). That’s simply not a good idea for a utility bike: much more expensive, more fragile/finicky and higher maintenance.
Poor Shimano. Only a record
Poor Shimano. Only a record GBP 1.3 billion in sales, but profits are down a bit. ? …I’d like to see their budget line for corporate entertainment alone. …And if they’re really struggling they could try wilfully pricing themselves out of the market like Campy! Or become not for profit! Rad!
This sounds like a business
This sounds like a business that, depsite dominating the sector, can’t make as much profit as it’s owners want. Not a problem really is it? Does anyone make stuff to supply a need or is it all just to increase consumption.
“Inventory levels are high” – We made more than we needed to last year
“profits are down despite record sales” – either my expectations are wrong… or we’re spending too much on salaries, entertaining, advertising etc.
A few years ago I was in a bike shop queue on the dunwich dynamo. My mechanical rear derailler had bent and was misaligned – solved with a hammer. The guy in front needed a software update for his groupset
Exactly. …and when is the
Exactly. …and when is the bike industry going to stop whinging about the covid boom? No one else is allowed to even mention the impact of Covid on their lives …when millions of people (including Shimano customers) had their livelihoods smashed by covid, and therefore, surprise surprise, cannot afford a new bike …and as a direct result of ongoing inflation, caused by the covid boom!!