Thu, May 16, 2019 - Page 11 News List

Europe, electric bikes buoy sales

GROWTH DRIVER:Sales of electric bicycles increased 60 percent in Europe, Giant said, while slight increases in the US and Chinese markets also helped to boost profits

By Kwan Shin-han  /  Staff reporter

Giant Manufacturing Co chairwoman Bonnie Tu stands next to her company’s booth at the Taipei Cycle Show at the Taipei Nangang Exhibition Center on March 27.

Photo: Yang Ya-min, Taipei Times

Major bicycle makers have reported stellar earnings for last quarter, but said they would continue to focus on electric bikes and European markets as US-China trade tensions linger.

Giant Manufacturing Co (巨大) expects the contribution of electric bike models to surpass 20 percent of revenue this year, up from 19 percent last year, as European markets continue to grow, the company said yesterday.

To circumvent anti-dumping duties levied by the European Commission on electric bikes made in China and tariffs imposed by Washington, Giant said that it is adjusting production in China and Europe.

Giant’s board of directors on Tuesday approved an investment plan of 50.49 million euros (US$56.52 million) by its Hungary subsidiary to cement the firm’s position in the European market and begin to see a contribution by the first half of next year, it said.

“The investment in Hungary aims to build a supply chain close to the market,” a Giant official said by telephone on condition of anonymity.

This year, Giant plans to develop electric bike components compatible with various levels of electrical and mechanical systems, and to launch bike components such as carbon-fiber wheelsets for high-end bikes under a new brand, the official said.

The company reported that net profit increased 165.2 percent to NT$683.88 million (US$21.98 million) for the first quarter, from NT$257.87 million a year earlier, or earnings per share of NT$1.82. Gross margin improved by 3.16 percentage points to 21.05 percent over the period.

The firm said that earnings growth was driven by a 60 percent increase in electric bike sales in Europe, a slight improvement in the US and Chinese markets, and foreign-exchange gains.

Traditional bikes and bike components remained the major revenue sources of its US business, it said.

Higher sales of electric bikes in Europe and foreign-exchange gains and dividends from overseas investments boosted Merida Industry Co’s (美利達) net profit to NT$478.93 million last quarter, from NT$6.29 million a year earlier, or earnings per share of NT$1.58, the company said.

Gross margin climbed 2.64 percentage points to 13.88 percent over the same period, Merida said.

Electric bikes accounted for 31 percent of revenue last quarter, compared with 24.68 percent for the whole of last year, company data showed.

Merida said that its outlook for the year remains positive, as global demand for high-end and electric bikes remains strong and as the Chinese market for high-end bikes has been warming up since the third quarter of last year.

Separately, bicycle chain maker KMC Kuei Meng International Inc (桂盟國際) forecast an increase in revenue for this quarter of 5 to 8 percent annually to about NT$1.37 billion, as the performance by Giant, Merida and other bicycle makers remains solid, a company official said yesterday on condition of anonymity.

KMC said that shipments of chains for 12-speed models, both high-end traditional and electric, began in January as major bicycle makers introduced 12-speed systems.

The contribution from chains for electric models is expected to increase this year, up from less than 10 percent of revenue last year, the company said.

The bicycle chain aftermarket is expected to be a major driver of this year’s performance, it said, adding that revenue from the aftermarket business in Europe has grown 15 percent over the past three years.

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