Giant Manufacturing Co (巨大), one of the world’s leading bicycle manufacturers, yesterday expressed concern that global inventory adjustments would continue into the first quarter next year.
Speaking at the company’s annual general meeting, Giant chairwoman Bonnie Tu (杜?珍) said that although pressure from inventory adjustments hit its peak at the end of last year, the inventory digestion has been slower than expected.
Given weaker-than-expected demand, the impact could last into the first quarter of next year, she said.
Photo: CNA
The bicycle industry had expected inventory levels to return to normal in the third quarter or even the fourth quarter.
This year has been a challenging year for the bicycle industry, leading to inventory adjustments in the US and European markets, Tu said.
Nonetheless, Giant remains upbeat about the industry’s long-term prospects, Tu said, citing demand driven by e-mobility, environmental protection and sports.
Giant CEO Liu Yuon-chan (劉湧昌) said that demand for low-to-mid-end bicycle models in the US market has stayed weak.
However, the Chinese market is showing signs of a recovery, especially for mid-to-high-end models, he said.
Globally speaking, the demand for pedal-assist e-bikes, high-end road bikes and mountain bikes have improved, Liu said.
In December last year, Giant reportedly sent a letter to suppliers asking for a 45-day payment extension in the wake of weak global demand.
The reports said the letter, signed by Yen Ching-hsin (顏清鑫), head of Giant’s global manufacturing center, was sent to suppliers that had or would ship their products to Giant between December last year and March.
The reports triggered a sell-off of Giant shares.
In response, Giant said that nondisclosure agreements prevented it from discussing the details of the letter sent to its suppliers, but added that, as a leader in the global bicycle industry, the company was determined to work closely with its suppliers to deal with inventory adjustments and diversify market risks.
In the first five months of this year, Giant posted consolidated sales of NT$34.9 billion (US$1.13 billion), down 3.45 percent from a year earlier.
The bicycle brand said that revenue from China rose more than 70 percent from a year earlier, while sales in the US and European markets dropped during the same period.
Shareholders yesterday approved Giant’s proposal to distribute NT$7.80 in cash dividends after posting earnings per share of NT$15.51 for last year.
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