Giant Profits Halved But Mid-Term Optimism Remains
Taipei, Taiwan
Giant Group’s nett profits have halved in the first quarter of 2023, compared to the same period in 2022, the Taiwan-based company revealed in a financial report released last week.
Its consolidated financial report for the 2023 first quarter shows the group’s nett profit after tax was NT$836 million (A$40.49 million), a decline of 54.1% year on year, while its pre-tax nett profit was NT$1.52 billion (A$74.5 million), a 41.3% drop year on year.
Giant says the result was impacted by non-operating expenses such as exchange rate fluctuations – which cost the company NT$82 million (A$4.02 million) for the quarter, compared to a NT$230 million ($A11.27 million) gain in the same period last year – and higher interest expenses.
The company’s consolidated revenue totalled NT$20.12 billion (A$986.21 million), a year-on-year decline of 9.6%, which it attributed to the impacts of European and North American markets moving to reducing inventories, as well as a higher comparison base for last year.
The report predicts a difficult year ahead but retains an optimistic outlook for the industry in the mid to long term.
It says considering the overall global economy situation, as well as ongoing “inventories adjustments” in the market, the bicycle industry faces a challenging year.
“In Europe, the colder spring is delaying the reduction of inventories,” it says.
“Although there are many challenges in the short term, the three main trends – e-mobility, eco-friendly and fitness – will continue to drive sales for the mid to performance-level products and Giant remains optimistic on mid to long-term growth for the cycling industry.
“Looking at Giant’s own brand performance in first quarter, based on local currency, China domestic sales had the best performance. Due to the recovery of consumer spending post pandemic and increased health awareness among Chinese consumers, there is an increase in cycling populations which drove demand for mid to performance-level cycling products that led to a first-quarter sales increase over 50%.
“Giant Europe and US sales were affected by higher inventories in the entry to mid-level products, hence sales declined by high single and double digits respectively.”
The reports says discounting and lower utilisation of the company’s production capacity reduced Giant’s gross margin rate to 21.9% at pre-pandemic level, which contributed to a 27.3% year-on-year fall in its operating profit to NT $1.69 billion (A$82.84 million).
It says Giant’s profits for the quarter were also affected by increased tax expenses because of an increase in undistributed surplus earnings and a reduction in applicable tax benefits.