The Automotive/Mobile segment revenue increased 110% to $317 million. According to Garmin’s CEO Dr Min Kao; “the PND and mobile segment is likely to exceed 50% growth in 2007”.
The Outdoor/Fitness segment revenue decreased 5% to $60 million during the first quarter 2007, but Garmin maintains its target of 20% growth for the whole year, with new products to be launched in the second part of the year.
All geographic areas experienced significant growth: North America revenue was $323 million up 60% compared to 2006; Europe revenue was $148 million, up 45%; Asia revenue was $21 million, up 17%.
During this quarter Garmin spent US$ 29.3 million in marketing - 6% of its revenue - and expects this to grow more than 1% in the second quarter due to an up coming TV advertising campaign (see our article here).
Nearly 500 people were added to the company during this quarter, including 70 new engineers and 130 associates for marketing and customer support. During this second quarter Garmin will continue to add more staff in sales and marketing positions. The company now acknowledges a global staff of 5200.
Ramping up manufacturing
In Taiwan the second Garmin manufacturing facility has seven production lines fully operational, bringing the total production lines in Taiwan to 21 and the production capacity to approximately 8 million units annually. Because of the significant increase in demand for PNDs, additional manufacturing lines will be added at this facility during the second quarter to create a full capacity configuration that will bring the total capacity to 12 million units. Additionally, Garmin is exploring the purchase of a third facility in Taiwan in order to meet future demand.
Internal and external investments
The company continues to invest in its intellectual property, having currently 301 US patents and 24 foreign patents issued, while 194 US patents and 13 foreign patents are pending. Its spending in research and development were US$33.5 million, 6.8% of its sales. During the last quarter of 2006 and the first quarter of 2007 Garmin also bought four companies for a total of US$ 100 million and according to Garmin’s CFO Kevin Rauckman, “we are still on evaluation mode for other businesses”.