New tax rates, other factors, take bite out of Giant’s profits

By Stephen Frothingham

TAICHUNG, Taiwan (BRAIN) — Giant Manufacturing’s first quarter report offers a look at how the e-bike market is changing the look of the bicycle industry.

Premium e-bike sales drove Giant’s growth in the first quarter accounting for more than 30 percent of its quarterly revenue.

The uptick in e-bike orders led to a 3.2 percent increase in revenue to $466.5 million compared to last year’s first quarter numbers.

However, on the downside, net income before taxes slumped 17 percent to $19.3 million.

Adding to the company’s financial burden were new Taiwanese tax rates that took a bite out of the company’s net after tax income — down 50 percent when compared year-over-year.

According to Giant, Taiwan’s tax rates for corporations increased from 17 percent to 20 percent clipping net after tax income by an additional $4.9 million.

“If (we) exclude the income tax effect, first quarter net income after taxes would have declined (only) 22 percent,” a release said

However, Giant cited multiple factors that contributed to its overall weakness in the first quarter: an unfavorable exchange rate with China’s renminbi (RMB), a squeeze on OEM margins, continued softness in China’s domestic market, as well as the hit it took from the new tax rates.

In addition, …read more

Via:: Bicycle Retailer and Industry News