“In the second quarter of 2012 we again posted strong revenue, unit volumes, and operating income even though the global economy is still difficult,” said Dr. Min Kao, chairman and CEO of the GPS maker.
“We have had a great first half; yet, we remain cautious given the macroeconomic dynamics facing each of our segments. Based on our first half performance, we are narrowing our full year revenue guidance to $2.75 ‐ $2.80 billion. This represents the high end of our prior range with improvement in auto/mobile and outdoor offset by the remaining segments. We are increasing our EPS guidance to $2.70 ‐ $2.85 due to the outstanding margins in the first half.“
Garmin’s outdoor segment posted revenue growth of 24% ($100 million) in the quarter. “Growth was driven by our golf line‐up, dog tracking and training, and our recently refreshed eTrex series.“
The growth in revenue was also driven by the acquisition of dog training company Tri-tronics which was not yet part of Garmin in the second quarter of 2011. But this revenue growth was matched by an operating income growth of 23%.
Fitness GPS revenue on a diet
In comparison the fitness segment underperformed as Garmin posted a revenue growth of only 5% in the quarter. Obviously this compared against strong performance in 2011 driven by promotional activity on the Forerunner 305 and the launch of the Forerunner 610.
But Garmin executives also mentioned a growing competition from other players. But even if revenue did not grow much the operating margin has however been very good for Garmin, up 9 percent to 42 percent.
Garmin added that in late June, the launch of the Garmin Swim – targeting a new niche in the fitness market - “has already been well‐received in the swimming community.“
“We anticipate growth rates will improve in the second half of 2012 as we launch new products for the holiday season to drive further market penetration,“ said Min Kao.
The aviation segment posted revenue growth of 4% ($76 million) as Garmin experienced “improvement with our OEM partners offset by weakness in the aftermarket.“
“Overall, the market continues to be depressed and we do not anticipate any significant level of improvement in the back half of 2012,“ commented Min Kao. However he is confident on the longer term: “the backlog of certifications over the next few years is significant and should contribute to improved revenue growth rates beyond 2012.“
In the marine segment, revenues declined 14% year‐over‐year to $68 million.
“The year‐over‐year decline is primarily attributable to a significant global slowdown in marine activity. The marine market continues to be affected by weak economic conditions, and we anticipate that the market will remain difficult throughout 2012.“