While inventory levels are coming down, the remaining overstock is depreciating. As the financial report for 2024 shows Giant had to write down USD 58 million to compensate for this. With Merida Industries, the write-down was even bigger at USD 105 million – and caused by a downward correction of its 35 percent share in the bicycle company Specialized.
Due to ongoing inventory issues in both Europe and Northern America Taiwan’s bicycle exports were down 30 percent year-on-year in 2024. Naturally this drop also shows in the financial reports of both the Giant Group and Merida Industries as the country’s two largest bicycle manufacturers. As for the Giant Group, turnover in 2024 was down by 7.4 percent to NTD 71.25 billion (US$ 2.16 billion), with Q3 being the only time where turnover was higher than the year before. Profit was down even more signficantly as net profit after tax dropped by 62.8 percent to NTD 1.26 billion (US$ 38 million).
As for the last quarter of 2024 Giant Group recorded an operating loss of NTD 1.04 billion (US$ 32 million) however, citing soft demand in China and ongoing discounting due to overstock in both Europe and North America as main reasons. Taiwan’s largest bicycle manufacturer also was forced to correct the value of its inventory as this overstock is losing value by the day. To compensate for this depreciation Giant Group had to write down NTD 1.9 billion (US$ 58 million). Nevertheless the company expects to return to a solid growth in 2025 and indeed after the first two months of this year the revenue was up 13.1 percent year-on-year after a slow start in January.
Merida Industries managed to return to growth in 2024, seeing its turnover grow by 8.7 percent year-on-year to NTD 29.7 billion (US$ 900 million). This was due to a low level of comparison in 2023 and thanks to an improved performance in the second half of the year. Operating profit stood at NTD 3.03 billion (US$ 92 million), and the year 2025 has been off to a promising start with the turnover showing a growth of 48 percent year-on-year after the first two month of 2025. These numbers look pretty reassuring, but the headlines were different due to a one-off write down that is not related to Merida Industries’s operational business.
Taiwan’s second-largest bicycle manufacturer also owns a share of 35 percent of Specialized Bicycle Company. While the latter is not a publicly traded company and thus does not have to disclose any financial reports, Merida Industries has a close view on its business and now decided to write down US$ 105 million as a result of a reevaluation of what its share is worth. As many other brands Specialized has been struggling with full warehouses and overstock depreciation. But there is an additional factor that has been causing high costs: in a bid to secure market share and floor space Specialized bought a lot of brick-and-mortar shops in the United States during the Covid pandemic, and these shops are not profitable under the current market conditions.