OLATHE: Garmin on Wednesday forecast full-year revenue and profit above expectations along with strong fourth-quarter results, sending its shares up 15% to their highest in more than a decade.
The company bounced back strongly in the past year after a smartphone-driven slide in demand for the car satnavs that made it famous.
The bounce has been driven mainly by growing demand for smartwatches and other wearable fitness devices that track everything from heart rates and calories to a pet’s movement.
The company, which competes with the likes of Fitbit and TomTom, forecast full-year profit of about US$3.70 per share and revenue of about US$3.5 billion.
Analysts were expecting profit of US$3.52 per share and revenue of US$3.43 billion, according to IBES data from Refinitiv.
Global wearable fitness trackers market is on track to generate revenue of US$48.2 billion by 2023, led by adoption of fitness tracking apps and rise in demand for wireless health monitoring devices, according to a report by research firm P&S Market Research.
In the reported quarter, three of Garmin’s five units – aviation, marine and outdoor – reported double-digit revenue growth.
The company is seeing strong demand from airline customers for its ADS-B based products, which broadcasts a plane’s position and is required by the US regulators by the beginning of 2020.
“ADS-B continues to be a driver of solid performance in the aftermarket, while new platforms and favorable market conditions led the growth in the OEM category,” Chief Executive Officer Clifton Pemble said on a post-earnings conference call with analysts.
However, revenue at Garmin’s auto segment, which sells navigation devices to automakers, fell 28% due to lower demand for dashboard-mounted satnav devices.
Rival TomTom had in February warned of weaker-than-expected growth in automotive revenue this year.
Garmin has been relying on the growth of its watches and marine cameras to offset a decline in sales of its traditional automobile navigation devices that have been its mainstay for years.
Sales in its outdoor segment, that sells smartwatches to campers and travellers, rose about 25% in the quarter.
“We anticipate revenue in the outdoor segment to grow by about 10% in 2019, driven partly by growth in watches and inReach subscriptions,” Pemble said.
But Garmin is facing greater competition in the area from electronics heavyweights Xiaomi, Apple , Huawei Technologies and Samsung Electronics.
Net income rose to US$190.15 million, or US$1 per share, in the fourth quarter ended Dec 29. Excluding items, it earned US$1.02 per share and beat the average analyst estimate of 80 cents, according to IBES data from Refinitiv.
Net sales rose about 4% to US$932.1 million in the quarter and beat expectations of US$891.3 million.