Revenue Round Up: 'We Really, Really Like What We Are Seeing'
It won't surprise anyone who has even loosely followed the movements of the cycling industry in 2020 that it has been a bumper year. Now, in spring of 2021, most publicly traded brands have released their financial statements for the year and it makes for more happy reading for the industry. Revenues are up across the board and, despite on-going issues surrounding shipping and currencies, a lot of brands are forecasting for the boom to continue for the next few years at least.
Shimano Sees 3% Rise in Bicycle Component Sales After Rocky Start to the Year
Despite the setbacks of global lockdowns and factory closures, Shimano ended the year with a 2.7% net sales increase in its bicycle department, up to 297,777 million yen, and an increased operating income of 18.4% to 68,494 million yen year-on-year. The first quarter saw Shimano sales slump 15% but it was able to recover following the incredible demand throughout the rest of the year. Shimano said the demand for bicycle parts was predominantly in the USA and Europe and it didn't see a significant increase in sales in its native Japan. The introduction of the new Deore groupset was one of the big drivers of the brand's success as the new groupset proved a hit with media and customers alike.
More info, here.
Fox Expects $1 Billion in Sales in 2021 and is Already Booked Out into 2022
Fox's bike division grew 22% over the year to total $367 million in 2020, this includes an incredible final quarter that was up 41% over the previous year. Total sales for the Specialty Sports (bikes) and Powered Vehicles division came to $891 million, which, according to Bicycle Retailer and Industry News, has allowed Fox to forecast its sales will top $1 billion for the first time in 2022 with estimates in the range of $1,035 million to $1,085 million.
Fox's CEO, Mike Dennison, reportedly told analysts on a call that orders are booked out into 2022 and that the brand had been able to increase its capacity in its Taiwan factories. He said, "We really, really like what we are seeing relative to the premium category. Obviously we fit in really well in that space and that helps."
More info, here.
Accell Group Net Sales Up 17%
Accell Group, the parent company of Ghost, Haibike and Lapierre, has announced a 10.6% increase in its bicycle sales and a 36.2% increase in its parts and accessories sales, which has led to a total sales amount of €1,296,000, up 16.7% from 2019. Accell also saw a huge increase in net profit, from €2.8 million in 2019 up to €64.8 million in 2020.
Ton Anbeek, Accell CEO, predicts that the demand for bikes will remain strong even after the pandemic has passed. He said, "Demand for bicycles is looking very healthy for the coming five to ten years. This is due to the electrification of bicycles, European governments’ investments in cycling infrastructure - given an additional boost by the European Green Deal - and thirdly, an increase in government subsidies and tax incentives for the purchase and use of (electric) bikes. In a strange twist of fate, in 2020 a health crisis had the unintended side effect of boosting this long-term trend driving the growing popularity of bicycles and cycling."
More info, here.
Dorel Sports Hits $1 Billion in Sales with 15% Growth
Dorel Sports, the parent company of GT, Cannondale, Fabric and more, recorded revenue of $1.04 billion for the year, up $135.8 million, or 14.9%, from $909 million last year. Despite a rocky winter that saw it on the verge of going private before shareholders voted against it at the 11th hour, Dorel also finished the year strong with fourth quarter revenue increasing to $265.3 million, an increase of $32.2 million, or 13.8%, from last year.
Dorel Sports says its profits were affected by, "product mix, limited container and component availability, higher container costs and the inability to fill all orders" but despite this its operating profit for the year nearly doubled to $52.3 million.
Martin Schwartz, Dorel President & CEO, said: "Strong demand for Dorel Sports product offering continued throughout the quarter with supply chain constraints being a significant limitation on our performance... Results for the fourth quarter include US$7.5 million of costs incurred in connection with the Company’s privatization process that was terminated by the mutual agreement of Dorel and the buyer group in February. Its rejection by a majority of our independent shareholders sent a clear message of their belief in the long-term potential for the Company as a public entity. As a management team, we are committed to rewarding our shareholders for their confidence in Dorel."
More info, here.
MIPS Strong Final Quarter Driven by Bicycle Helmet Sales.
Net sales for MIPS increased by 36% to SEK 365m, including a growth of 60% in Q4 alone. In a year MIPS describes as "strong but strange", it has ended the year with its rotational protection system installed in 7.2 million helmets, across 729 helmet models (up from 538 last year). Referring to bicycle helmets specifically, Max Strandwitz, President and CEO, said, "Normally our sales in the fourth quarter are mainly solutions for bicycle helmets. This was even more apparent this year, as the strong development in the Sport category was driven by high demand for bicycle helmets... The inventory levels in retail are low. This means that the current production is aimed at restoring stock levels and building up the stock for the coming season. As demand has exceeded our customers' manufacturing capacity for helmets, we expect to see continued high manufacturing volume coming quarters. Despite a challenging environment, we have continued to broaden our customer base with 11% during the year and have now 107 customers in the Sport category in total."
More info, here.
Schwalbe Sales up 7%
2020 was also a good year for tire giant Schwalbe who recorded a 7% increase in sales up to €225 million. Apparently, Schwalbe’s e-bike tire the Marathon E-Plus, as well as trekking and MTB models were the biggest drivers of this growth. This year, Schwalbe also invested €20 million in a new company headquarters in Reichshof and made its most popular model, the Marathon E-Plus, its first Fair Trade tyre.
Frank Bohle, executive partner of Schwalbe, said: "The year 2020 brought us an emotional roller-coaster in all areas of life. Luckily, temporary closures of bicycle retail stores did not result in long-term sales collapses in our industry. On the contrary, reopening after the lockdown resulted in a jump in demand for bikes and bike parts never seen before. The bicycling boom had been going on for years, but the Corona pandemic acted as a powerful catalyst, as cycling allows people to commute without worrying so much about the virus. Almost all bike segments experienced benefits – most of all e-bikes, but also gravel bikes, mountain bikes and formerly niche products such as cargo bikes."
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Some of their costs are likely fixed, so as volume goes up so does op profit, so in that way they would be making more per bike.
The cost of the raw materials is a small fraction of the cost to produce the product
Or they feel that if they raise it more it may have a negative effect on future sales
Or they are so rich that they don't need to make more money
Also, given the high demand, they probably sold most of their stock at full price rather than having to clearance stuff out at the end of the season. I can't say how much this applies to the producer vs. distributor/retailer, but could also be a factor in some of these numbers.
people: rip off! price increase of 8%
same people: 50-80% price increase on my old used bike, totally no rip off
it's almost like the most basic principle of economics, supply and demand, has nothing to do with your opinions about a businesse's moral obligations to altruism!?
No different than a booming real estate market. If I have 30 bids on my house, I am taking the highest one with the least amount of terms. $200k over asking, all cash, no contigencies...or, $50k under asking and 3 months rent back!? gee.....
Reporting up to the end of December 2020
Sales are up 4%, revenue up 18% in the bicycle division. Profit up 10M yen on 2019 which is a 22% increase
www.shimano.com/en/ir/library/cms/contents/Summary%20of%20Financial%20Results%20FY2020-Q4.pdf
Bike Company - "We supplied all the bikes we could"
Employees - " We demand to be paid"
Bike Company - Why?"
Employees - "You made record profits"
BIke Company - "You're fired. We bought more bikes to sell instead. Stakeholders are pumped.
Let's send out a memo about the profits part!"
Everyone is assuming increased sales = increased profits, which is not always true.
Next year they sell 2 million dollars in bikes and made 20 dollars profit then by your example they made 20 times the profit
You are comparing apples and oranges
Let's simplify the math: for every $100 sold, $5 retained as profit. Without reading financials, assume 20% direct labor cost as a manufacturing standard, leaving $75 as the cost of the bike in parts, packaging, distribution, etc. If those costs go up 10%, that's $7.50 added cost and now -$2.50 profit and Dorel will be out of business in due course. Or they raise prices, reduce direct costs (labor, bonuses, coffee machines, etc) and risk being crucified on social media by the mighty masses of the ill-informed.
(for comparison, those big global tech brands that sell us as the product make 15-30%, so this is far from robbery on part of Dorel).
To your second question, why wonder? this info is publicly available and yes, Dorel did receive support (but we do not know how much, it is likely outlined in their statements as a revenue source). apps.cra-arc.gc.ca/ebci/hacc/cews/srch/pub/bscSrch
These companies had a year of stellar sales on inventory that had been produced, mostly, under lower cost of supplies. That was a one time phenomenon, supply costs have more than caught up so if bike companies sell at the same price as last year with these higher input costs they will make less or negative profits in 2021 at those prices. If you think this is wrong, power to you, but be mad at the capitalist system, these company managers are just doing their job and keeping the operation viable while returning modest profits to owners.
Sorry, couldn’t resist the sarcasm.
Schwartz is paid roughly 800k base salary and 500 as a bonus for 2020, down 30% from prior year. Owns personal holdings of $18M in stock as well. Compared to other companies the exec compensation is below average.
Honestly, mostly comes down to profit margins and basic economics. Demand going up seems great for bike companies, but if the entire industry experiences the same demand, they'll see overall costs go up too.
If supplier A used to charge $12 for a part, and wants to change the price to $15 for that part, a bike company could go shop around at other suppliers. Now though, demand is so high at *every* supplier, that there just isn't the same option to shop around like you used to. If you don't buy the parts from your supplier, it might take you another year or two before you can find somebody that makes it at the price you want, and by that time you've missed out on an entire year of sales.
So you mostly just have to eat that cost. And when you're buying hundreds of thousands of those parts every year, a $3 rise in parts costs can easily suddenly be half a million dollars of extra expenses.
And those expenses are rising from every direction. Inflation is hitting the USD - which means any company that works with any overseas suppliers (pretty much every company) is seeing the purchasing power of their dollar reduced. Shipping costs are increasing enormously.
The bike industry isn't operating on great margins. Very few people are getting rich by making and selling bike parts. It isn't like the tech industry where costs are pennies on the dollar. Raising prices sucks for bike companies as much as it does for the consumer, because ultimately it reduces demand for a product and it means they sell less of that product. Price increases are weighed very carefully, and nobody really walks away happy.
And as companies start running into parts shortages, it gets even harder. Because if your suppliers literally can't keep up with the demand you're facing from consumers, you start running into situations where customer service can suffer, you're leaving money on the table because you can't provide product, and there are a whole host of issues that can arise from that.
So yeah, business is really good for the bike industry, and well deserved to be honest, bikes are awesome these days, components are dialed, and the state of bikes is really advanced for the budgets most are working with. And to be clear, this isn't is "woe is the bike industry, feel sorry for them because they're seeing high demand" post - just a "things might be more complex than just plain greed."
LOL, you don't business much, do you? No business in their right mind would keep cash on hand simply to be taxed.
news.aa.com/news/news-details/2021/American-Airlines-Reports-Fourth-Quarter-and-Full-Year-2020-Financial-Results-CORP-FI-01/default.aspx#:~:text=Airlines%20Group%20Inc.-,(NASDAQ%3A%20AAL)%20today%20reported%20its%20fourth%2Dquarter%20and,or%20(%243.81)%20per%20share%243.81.
Cash is King.
Try again.
American Airlines earns $7.6B/year in profit
During boom times it upped fees & made service worse
Instead of saving cash for rainy day it enriched execs with $15B in stock buybacks
Now rainy day comes & airlines want a $50B bailout
Airlines spent 96% of their free cash flow in the last decade on stock buybacks, enriching execs. Now they get a bailout.
What would those in charge say if people seeking gov't assistance spent 96% of income on lattes, avocado toast and the new iPhone
Quotes from @danpriceseattle on Twitter, but all come with direct links to what he quotes (for the haters who say I'm cherry picking)
The AA example proves they should have kept more cash on hand - they didn't, nearly folded because of it, and are now scrambling to ensure liquidity. Proves the point that responsible businesses manage cash very, very closely.
Wasn't a viewpoint. Just stats.
Well, I better get back to work. Wouldn't want them to go without their Starbucks.
I'm starting to think that they might not be entirely transparent in their business operations and motivations.
Shocking.
I hope after this boom in the bike industry has burst, customers remember the brands that jacked their prices up and didn't bother to reduce them afterwards, and take their business elsewhere.
I just want companies to invest in manufacturing within their biggest markets.
They are treating it like a pandemic bubble, and judging from human behavior over the past year, they will be content to milk it while its good, and plan and build very little for a future non-bubble state.
I do get that components, shipping, overhead costs more at present so their margins are not proportional to revenue increases.
here and then the subsequent precipitous drop off 2 months later, it may not mean much difference long term.
I don't blame the bike company at all for shipping delays but I do question raising the price for those who already paid deposits, especially given that the fat bikes weren't even arriving in time to use this winter. In any case it left a bitter taste so I pulled my deposit.
In some ways it is unfair on the shops who will hav to pay more for the bike when it arrives - but they can generally balance out what they lose on existing forward orders by selling inventory they already paid for at the new higher price.
If the base cost of products go up (and they are by 8-30% across the board), they will need to offset that somehow either by reducing costs in other areas (if they could have they would have already), or increase prices.
It doesn't matter if revenue grows if their margin erodes, as at the end of the day its a business, and if the ROI dips below normal profits, companies will slowly go under as why would anyone invest their cash into a business that only generates half the profits of any other investment?
- Revenue for the year increased 14.9% to $1.04 billion.
- Operating profit *nearly doubled* to $52.3 million.
Revenue goes up, Yay.
Profits go up 3 times as much, Yay!
Quick, raise the prices!!
Other things like bikes are not expected to be available until mid 2022...
It's not too fun having to tell customers that you can't sell them a bike or a bike part because "pandemic reasons".
Pretty much down to basic servicing of bikes now at the shop I work in and even that is a bit tricky now if bikes need parts because the distros can't get stock either.
At least there are 26" inner tubes now.
Bicycle Industry please get your factories working.
Sincerly, a frustrated bicycle mechanic.
Second hand bike prices are high right now but they are only going to get higher over the next year.
You’re probably right. But we can all dream about the good old days.
HODL!!11!!!1
"Cocalis [CEO Pivot bikes] says that it’s not fair to compare cars and bicycles — or even motorcycles and bicycles — because the bike world innovates on a pace that’s a lot closer to that of iPhones than that of motorized transportation."
I was ready to be convinced, but his argument ran into a ditch. Bikes do not resemble the complexity of an iPhone.
Bike companies are not charities, and they have and will continue to charge what the market will bear. And it's a hefty price, now that we have extra dollars from being "Covid-grounded" and cheap credit (at least in North American markets) is easily accessible.
The silver lining is more folks are riding bikes. And the Big 2 components producers (Shimano and SRAM) still need some competition so hopefully a more lucrative bike industry will introduce new players.
For others who might want to see the article, here it is. I had been searching for why bikes are expensive. I think Chris Cocalis made it more obvious–that in fact yes, bikes are too expensive. lol
www.gearpatrol.com/outdoors/a691720/bike-price
Hopefully, the bike industry does a better job of anticipating/coping with the coming bust.
They’ve f**ked the boom up this time pretty well.
What would be interesting going forward is the amount of pegged up demand there is around. I for one will not buy or renew any of my 4 bikes this year. In a normal year I would probably renew one or two. My enduro bikes is entering its fourth season with heavy use for instance. Next year it might be due for a change. I do not believe I am alone. Therefore I do not believe that the demand will flatten of the next couple of years. As a consequence I reckon the prices will stay high for several years. Adding to this there is a bicycle mega trend going on in Europe(and other places too!) at the moment, where more and more people are encouraged to ride bikes instead of driving cars - this also affects the demand for bike parts. I would be very much interested to know more about the long term forecasting within the industry. If everybody thinks this will blow, securing their profits for the next years, we have an issue...
Pinkbike, Maybe you could cover even more the business side of things? It seems to gain a lot of interaction with your audience...
Am I being too optimistic in my hopes of getting another bike?
Sales have increased tremendously from previous years , except there is one very big down side to that .
Very few customers have actually taken delivery on the bike that they ordered . myself included .
1. Employees just wont come back to work = costly new hires and training
2. Competitors have bought up all the raw materials = you are now waiting 3 to 4 months for a mill run of steel (Min $40k by the way)
3. Marketing forgot to stop selling things while your governor shut the doors on your plant = orders in, but no orders out...angry customers and 12 hours a day 7 days a week to try and catch up
4. No one is even close to 60% as effective working from home = mistakes, late work, missed deadlines...
Lets just all get on what ever 2017 bike you've got laying around and ride into the sunset...2024 we will all be complaining about something else...like gas prices
Accell figures, something not right. Revenue looks wrong
Good thing you guys are ace at bike stuff (which you are., really, I spend too long on this site), because this is saying “bike companies mostly made more money due to enhanced demand but supply issues and costs hindered some companies”
I just tried to order a bike for my daughter from my LBS, I knew there would be a delay but when I was told the delivery time for the Trek bike was August 2022, I had to walk away and go for a direct sell bike. Those kind of delays arent just about demand, raw material price, COVID etc. Having a lead time of 14 months on a product like a bike is going to eventually hurt bike shops.
The current demand issue at LBS only drives more people to the internet which in the long term hurts brands than only sell through bike shops.
I'm not here to talk gun politics one way or another, I'm just pointing out that that market faced similar circumstances a few years ago ad things only got better and cheaper in the long run. Short term, bare shelves and sad faces. Long term, I absolutely see this as a good thing for MTB.
Maybe think about that before making your woke sweeping comments about bike companies which probably do more to better the sport than your sorry ass.
Actually as per the article, in one example annual profits "nearly doubled to $52.3 million", where their revenues were up 14.9%...not a mathematician but I think that's more like 6:1.
Whoa.