Merida Industry Co (美利達) has seen signs of recovery in the US and European markets this year, as customers are gradually depleting their inventories, the bicycle maker told shareholders yesterday.
Given robust growth in new orders at its Taiwanese factory, coupled with its subsidiaries’ improving performance, Merida said it remains confident about the bicycle market’s prospects and expects steady growth in its core business this year.
CAUTION ON CHINA
Photo: Ritchie B. Tongo, EPA-EFE
However, the company must handle the Chinese market with great caution, as sales of road bikes there have declined significantly, affecting its revenue and profitability, Merida said in a statement, adding that it would continue to control inventory and flexibly adjust market strategies in that market.
Merida is a leading mid to high-end bicycle manufacturer, which distributes its products under the Specialized and Merida brands. The company is a major player in the bicycle industry and Taiwan's second-largest bicycle manufacturer after Giant Manufacturing Co (巨大機械). Merida has a global market share of around 2 percent, according to SinoPac Securities Investment Service Corp's (永豐投顧) estimate.
Cumulative revenue in the first five months of this year edged up 0.9 percent year-on-year to NT$12.06 billion (US$410.3 million). Net profit in the first quarter rose 0.7 percent from a year earlier to NT$418.53 million, or earnings per share of NT$1.4, company data showed.
During the company’s earnings conference on May 22, Merida said that the New Taiwan dollar’s rapid appreciation early last month would affect its revenue and profits in the second quarter.
The company might seek pricing adjustments if the NT dollar continues to strengthen, it said.
As for the US’ baseline tariff of 10 percent on all imports, Merida said brand customers have raised retail prices for the US market and so far, had not asked the company to share the costs.
Regarding the US’ so-called “reciprocal” tariffs, the company would respond according to the government’s negotiations with the US, it said.
CASH DIVIDENDS
Shareholders yesterday approved a proposal to distribute a cash dividend of NT$4 per share, even though the company posted a loss per share of NT$2.34 last year.
Merida’s revenue last year rose 8.7 percent year-on-year to NT$29.63 billion and operating profit reached NT$3.03 billion, from NT$3.39 billion the previous year.
However, with significant non-operating losses of NT$3.77 billion due to one-time impairments, including a deferred income tax asset write-down and goodwill impairments related to its retail operations, the company reported a net loss of NT$766.17 million for last year.
The company decided to use its retained earnings to reward shareholders, as the non-operating losses for last year did not involve cash outflows and it remains confident about the outlook for the bicycle business this year, Merida said.
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