As you might expect given the market circumstances, the major bicycle companies in Australia have all been showing strong sales growth and improved ‘bottom lines’ in their latest financial reports.
Under Australian law, foreign owned Australian subsidiary companies who are categorised as Significant Global Entities (SGE’s) are required to lodge annual financial statements with the ATO (Australian Taxation Office). The ATO then passes on these statements to ASIC (the Australian Securities & Investments Commission) who make them available to purchase at a small fee. Although these financial statements are therefore readily available, we have always chosen not to publish any details relating to particular companies for two main reasons.
Firstly, we don’t believe it’s in our commercial interest to do so and secondly, the published financial statements don’t always necessarily paint the complete picture when it comes to foreign owned subsidiaries, in part depending upon how they price transfer payments to overseas branches of their company for tax planning and other purposes.
However, we thought you might be interested to read a broad-brush aggregated picture of what has been happening within the major bike brands over recent years.
In summary, sales are up strongly, as are gross and net profit percentages.
Inventory levels have been falling, so when combined with the increased sales, this means that stock turns have increased dramatically.
Accounts receivable, that is the total amount owed to these major wholesalers by bicycle retailers across Australia, have also fallen significantly. Once again, when the increased sales are taken into account, this means that the average days owing on accounts has fallen even further.
In summary, the major wholesalers are making significantly better profits and requiring less cash to make those profits, due to the drop in both stock holdings and accounts receivable. Depending upon their trading terms and pre-payments required from their suppliers, this reduction in cash requirements would be at least partly offset by the much longer lead-times now required for future orders.