Daiwa owner sees profits decline 47% in first quarter of trading

Globeride – the Japan-based owner of the Daiwa fishing brand – has reported a 7.7% slide in sales for the first quarter of the financial year to 31,481million yen.

The outdoor sports and leisure industry good supplier also saw its operating profit decline 47.5% to 2,122m yen compared to the same period last year as a result of the decrease in revenue and an increase in expenses, including labour costs. This was despite positive performances in the Americas and Europe.

The group told investors that while the economy in its major market – Japan – has been showing a gradual recovery trend backed by an increase in consumption and the return to normal of economic activity, the future remains uncertain due to the high price of raw materials, rising prices due to the weak yen and a continued stagnant consumer sentiment.

Overseas, although it has seen a recovery in spending mainly in the US and Europe, ‘geopolitical risks’ such as the situations in Ukraine and the Middle East, prolonged monetary tightening in the regions. It added that concerns remain about the future of the Chinese economy where an economic recovery has not yet been realised.

“The outdoor sports and leisure market in Japan is sluggish due to the diversification of spending on other leisure activities such as travel and rising energy and commodity prices putting pressure on household finances,” said Globeride.

It added that in this environment, the group has introduced new products and services that satisfy customers, including the introduction of the new CERTATE spinning reel.

Sales in its domestic market were down 10.7% compared to the same quarter last year to 20,575m yen and segment profit dropped by more than half to 1,513m yen.

It reported that market inventory adjustments in the Americas are settling down, but warned recovery is slow due to high interest levels. “In this environment Globeride has made efforts to expand US sales, mainly in the bass market, with products like the TATULA series,” it said.

As a result, sales revenue was 15.9% up year-on-year to 4,355m yen and profit up 160m yen – 95.3%.

Despite European sales lacking strength with some areas affected by bad weather, the region delivered an 18.3% increase in revenue to 4,945m yen – a rise in profit of 463m yen (51.1%).

Sales in Asia and Oceania dropped 10% to 10,429m yen as profit fell 38.1% to 926m yen.