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.
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.”