Garmin Q1: revenue up 35%; operating margin at 26%

Garmin Q1: revenue up 35%; operating margin at 26%
Garmin today announced a total revenue of $664 million for the first quarter of 2008, up 35% against the same period last year. Gross margin increased sequentially and held steady year-over-year, with first quarter 2008 at 48.2% (48.3% in Q1 2007). Operating margin increased sequentially and declined slightly year-over-year, with first quarter 2008 at 26.0% (28.1% in Q1 2007).

North America revenue was $411 million (62%) up 27%, Europe revenue was $211 million (32%) compared to $148 million, up 43%; Asia revenue was $42 million (6%) compared to $21 million, up 100%.

"We are pleased with our performance in the first quarter, particularly given the general slowdown in the global economy”, said Dr. Min Kao, Garmin Chairman and CEO. “Demand for our automotive/mobile products continued beyond the traditionally strong fourth quarter holiday season, with another quarter of robust triple-digit growth. While the first quarter is typically our slowest quarter, we were nonetheless able to achieve healthy growth in each of our business segments and each geographic area. We look forward to a successful second quarter, with an array of new and exciting portable navigation and outdoor/fitness devices becoming available.”

Garmin’s Automotive and mobile segment revenue (mainly PND) increased 43% to $452 million, representing 68% of total revenue in the quarter; operating margin was 24%.

According to Garmin, “year over year [the company] has seen a triple-digit unit growth in the PND market in both North America and Europe. Market research indicates Garmin's PND market share in North America remains relatively stable [40 to 50% according to NPD], while European market share is increasing, a benefit of our European distributor acquisitions”.

The product mix was 80% low end (under $300 retail price) and 20% high end during the first quarter; Garmin expects it to remain at this level for the rest of the year.

Garmin anticipates its average selling price for PNDs to decrease 25% during the year but a large part of it should be offset by a raw material cost reduction of 20% (10% more than previously expected), due to cost decrease for Flash memory and LCD display.

2008 Outlook
However, Garmin remained cautious today on its full year guidance, saying: “While it is still our objective to reach our earlier guidance of $4.5B in full year revenues and $4.40 in EPS, these goals now include some risk. Without clear visibility of the economic outlook, we do not feel it is appropriate to be more specific at this time. As in previous years, we will wait until the end of the second quarter to provide an update to our full year financial expectations”.


Wednesday, April 30th 2008

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