Garmin lowers full year guidance, postpone Nuvifone



Nuvifone: postponed
Nuvifone: postponed
For its second quarter 2008 Garmin today announced total revenue of $912 million, up 23% from $742 million in second quarter 2007 but lower than the analyst expectations. Additionally, Garmin decided to lower its guidance for the full year 2008 at $3.9 billion which is not a complete surprise since its management mentioned on April 30th that the previous guidance ($4.5 billion) was at risk.

During the second quarter Garmin’s Automotive/Mobile segment revenue increased 24% to $632 million and Outdoor/Fitness segment revenue made a big jump of 54% to $119 million. Aviation revenue increased 15% at $90 million and the marine business decreased 11% to $71 million. Gross margin was down at 45.8% compared to 48.2% in first quarter 2008 and 50.5% in second quarter 2007. Operating margin was up 20 basis points sequentially to 26.2% in first quarter 2008 and was down compared to 32.5% in second quarter of 2007. North America revenue was up 27% at $576 million compared to $455 million. Europe revenue was $307 million compared to $257 million, a growth of 19%. Asia revenue was $29 million compared to $31 million, down 6%, mainly due to a transition between a distributor and Garmin’s own operations in Australia.

Garmin's revenue
Garmin's revenue
Garmin also announced it sold 3.9 million units in the second quarter of 2008, up 54% from the same quarter in 2007; year-to-date units sold increased 64% from the same period in 2007.

PND segment
The auto/mobile segment which comprises mainly PNDs represented 69% of the whole business, up one percent against second quarter 2007. The gross margin in this category was 39% and operating margin was 20% against 46% and 29% respectively one year ago.

Garmin’s PND market share has been growing to 55% in North America and remained stable in Europe at 20%. The product mix continues to be very much in favor of low end devices which represented 80% of PND units sold and 70% of revenue in the auto/mobile segment. For the whole year Garmin expects 25% PND price drop, most of it being compensated by cost of production decreasing by 20%.

Garmin also said it has now acquired distributors in seven countries representing 70% of the European market and that it expects the acquisition of its distributor in Austria and Portugal to go through during the third quarter. Additionally Garmin established its own offices in Australia in July, and also opened an office in China “to provide support for Garmin’s in-country distributor to seize opportunities in this emerging market.”

Garmin's margin by segment
Garmin's margin by segment
Continued...

Wednesday, July 30th 2008


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