Garmin Tops Expectations on Greater Demand for Outdoor Products

Andrew Klips  |

Garmin Ltd. (GRMN) proved that it’s not just for autos anymore as third-quarter profit rose by 6.7 percent to $140.3 million from $137.6 million in the same quarter last year, in part on the back of increased demand for products it gadgets.

Total revenue increased modestly to $672 million in the third quarter from $667 million in the year ago quarter.

Earnings per share slid from 77 cents per share in the third quarter of 2011 to 72 cents per share in the latest quarter as a result of more shares outstanding now. As with many other international companies, sales were impacted by unfavorable currency exchange rates. Eliminating the forex component, earnings would have tallied 74 cents per share this year as compared to 71 cents per share in the year prior quarter.

Analysts were calling-for revenue of $661 million and earnings of 61 cents per share.

"Our team continues to execute well, delivering another quarter of revenue growth and strong margin expansion," said Kevin Rauckman, Chief Financial Officer at Garmin.

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Once the “thing to have,” Garmin’s automotive/mobile segment posted flat revenue for the quarter, as consumers switch to smartphones for turn-by-turn navigation, but its outdoor segment – which include items such as golf course information devices – rose by 11 percent to $105 million during the quarter. During the first nine months of 2012, the outdoor sector has seen a 17 percent increase in sales.

The automotive/mobile segment is still far-and-away Garmin’s leading revenue generator, accounting for more than half of its $1.95 billion in total revenue so far in 2012.

The Swiss company’s aviation segment increased by 3 percent in Q3, while its fitness and marine segments saw contraction in sales in the third quarter. Revenues derived from the Americas and Asia Pacific regions increased 8 percent and 19 percent, respectively, as revenue from the economically-challenged EMEA (Europe, Middle East and Africa) slid during Q3 (-13%), although still posting gains of 2 percent through the first three quarters of 2012.

The navigation device maker also boosted its full-year outlook. For 2012, Garmin now expects a per-share profit of $2.75 to $2.90, up from its earlier forecast $2.70 to $2.85.

Shares of Garmin closed trading on Friday at $38.99 and are down about 2 percent in 2012.

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