Garmin Q4 2015 Revenue Drops 3%, Full year down 2%

PND Market Decline Continues to Impact Revenue



Garmin Q4 2015 Revenue Drops 3%, Full year down 2%
In the last quarter of 2015 Garmin revenue dropped three percent ($781 million) the company disclosed yesterday in their call with financial analysts. For the full year the revenue was down two percent ($2,820 million).

Gross and operating margins were 52.9% (down from 53.6%) and 18.7% (down from 21.9%), respectively.

Pro forma earning per share was $0.74 (down 4%) for the fourth quarter 2015 and $2.49 for the full year (down 20 percent from $3.10).

Garmin ended the quarter with cash and marketable securities of about $2.4 billion.

“Despite the challenging global economic environment and the intensified competitive landscape of 2015, we finished strong with revenue and margins exceeding our expectations,” said Cliff Pemble, CEO of Garmin.

“We are utilizing our robust balance sheet to further diversify our revenue base in adjacent categories with our recently announced acquisitions. We believe we have strong products across all of our business segments and are well positioned as we enter 2016.”

Auto Revenue Down 21% in the Quarter
The small annual revenue drop is entirely due to the sharp decline of the Personal Navigation Device (PND) market. Garmin automotive segment (personal Navigation Devices and B2B Automotive) posted a revenue decline of 21% in the fourth quarter. Gross and operating margins were 42% and 13%, respectively.

Revenues were down 15% for the full year and Gross margins and operating margins were 44% and 13% respectively.

Fitness Grows 14%
In comparison the fitness segment posted revenue growth of 14% ($228,7 million) in the quarter. This reflected “the strength of our wellness, running, and cycling product offerings,“ Garmin said.

Gross margin fell to 51% in the quarter, while operating margin declined to 18%. The gross margin decline was driven by holiday promotions and competitive dynamics in certain product categories, as well as product mix within the quarter.

Answering to an analyst question Cliff Pemble said: “we believe we are the market share leader in the GPS-enabled wearable device part of the market. We believe that our share is currently in the low-to-mid 40% range.“

“In 2016, we are targeting revenue growth of approximately 10% in the fitness segment,“ said the Chief Executive.

Continued...

Thursday, February 18th 2016


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