Yonex Fiscal Q3 Sales Growth Accelerates As Asia Recovers, Badminton Grows

Yonex Co., Ltd saw revenue growth accelerate its fiscal third quarter ended December 31 as nine-month year-to-date (YTD) sales jumped 47.5 percent to ¥79.6 billion. The performance for the YTD period was enhanced by exceptional growth in the fiscal third quarter as revenues surged 54.0 percent to ¥29.5 billion for the three-month period ended December 31.

Yonex said it saw record high sales in the cumulative YTD period due to strong demand in all regions as their overseas subsidiaries saw sales increases in local currency terms and forex exchange also boosted sales due to Yen depreciation.

Home region Japan net sales increased 30.5 percent to ¥35.6 billion for the YTD period, delivering q 38.4 percent increase in operating profit to ¥2.1 billion. The company said that the Japan grew in part due to a recovery in the badminton and soft tennis club activities. Sales of tennis rackets also “continued to trend strongly.” Japan region gross profit margin was lower due to raw material price hikes and higher costs of imports caused by yen depreciation. Growth in gross profit was said to be due to higher sales contributed strongly to the rise in operating profit.

In Asia, net sales surged by two-thirds in the YTD period to ¥36.9 billion while operating profits jumped 78.7 percent to ¥7.4 billion. In China, the impact of sporadic lockdowns in was said to be limited. In Taiwan, badminton sales are gaining momentum as domestic tournaments are back on track and local athletes performed well in the international competition held in Taiwan. Asia region SG&A increased due to higher advertising expenses for marketing investments in China. The higher gross profit was due to sales growth contributed significantly to operating profit growth.

North America net sales grew 65.4 percent for the YTD period to ¥3.9 billion, but operating profits could not keep pace, growing 36.5 percent to ¥485 million. Sales of badminton equipment continued to grow strongly due to the reopening of sports facilities and restart of sports club activities. A slowdown was seen in demand for tennis products, but sales increased year on year. Yen depreciation helped to boost reported sales figures. Higher personnel expenses to fortify the region’s sales structure and investments in advertising led to a rise in SG&A expenses. The increase in gross profit due to higher sales offset the increase in SG&A.

Europe net sales jumped 65.4 percent to ¥2.7 billion but operating profits fell by almost the same percentage to just ¥23 million. Reopening of badminton facilities and restart of international tournaments revitalized the badminton market. Firm demand for tennis led to strong sales of racquets and other tennis equipment. Gross profit margin declined due to changes in sales mix. Advertising expenses increased due to the sponsorship of international tournaments.

Company operating profit increased 55.9 percent to ¥9.3 billion for the nine-month YTD period, with an increase in gross profit due to higher sales offsetting the negative impacts of raw material price hikes and higher purchasing costs caused by Yen depreciation. Gross margins narrowed 120 basis points to 43.6 percent of sales in the YTD period while SG&A reportedly increased 39.3 percent as the company stepped up its marketing activities, but sales growth and the resulting gross profit gains offset the cost of those efforts. Operating profits rose 60 basis points to 11.7 percent of sales for the YTD period.

Ordinary profit increased 47.1 percent to ¥9.2 billion for the nine-month YTD period and net profit rose 31.9 percent to ¥6.7 billion for the period. Both figures reflect a weaker level of profitability growth after Yonex posted 81 percent ordinary profit growth and 67 percent net profit growth in the first half YTD results.

Looking ahead, sales and profits are expected to exceed previous forecasts, with full year sales now estimated at ¥106 billion, up 9.3 percent from the previous forecast of ¥97 billion and a 42.3 percent increase from the 2022 full year numbers. Net profit is expected tp now grow 24.6 percent year-over-year to ¥7.2 billion.