ASICS shares plunged amid yen appreciation and a BOJ rate hike. The sharp drop in the share price of rival sportswear company On is also influencing investor sentiment.
For ASICS, whose overseas sales account for more than 80% of total sales, yen appreciation is holding back earnings growth. First-half sales rose 32.7%, but growth was limited to 22.0% excluding the impact of foreign exchange. The company's forecast was based on an exchange rate of ¥160 to the dollar and ¥180 to the euro, but from September onward the yen appreciated, with the dollar trading in the ¥157 range and the euro in the ¥178 range, below those assumptions. The Bank of Japan's rate hike in September also contributed to yen appreciation.
The performance of other companies in the same industry is also weighing on the share price. Rival On reported August results showing a 13.5% year-on-year increase in sales, or 21.6% excluding the impact of foreign exchange, and its share price fell 20.3%. Over the full period, the decline has reached approximately 31%.
Third-quarter results are scheduled to be announced on 13 November. The key points will be whether second-half growth is progressing as planned and how the company handles its FX assumptions of ¥160 to the dollar and ¥180 to the euro. If the company leaves those assumptions unchanged, the market may more readily price in results below expectations as long as the yen remains strong. If it revises the assumptions, the gap between earnings and the share price may narrow.