(Reuters) – Garmin Ltd. on Wednesday forecast for the full year revenue and profit than expected, together with a strong fourth quarter, sending the shares up to 15 percent to the highest in more than a decade.
A Garmin GPS watch is shown on a display in a shop in Encinitas, California, USA, 30 October 2017. REUTERS/Mike Blake
The company bounced back strongly in the past year after a smartphone powered slide in demand for car satnavs that made it famous.
The bounce is mostly driven by the growing demand for smartwatch and other wearable fitness devices that track everything from heart rate and calories to a pet’s movement.
The company, which competes with the likes of Fitbit, Inc., and TomTom, forecast full-year earnings of approximately $3.70 per share and revenue of about $3.5 billion.
Analysts were expecting a profit of $3.52 per share and revenue of $3.43 billion, according to the IBES data of Refinitiv.
Worldwide wearable fitness trackers market is on track to generate sales of $48.2 billion in 2023, led by the adoption of fitness tracking apps and an increase in the demand for wireless health monitoring devices, according to a report from 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 the ADS-B products on the basis of which broadcasts an aircraft’s position and is required by the US regulators by the beginning of 2020.
“ADS-B remains a director of a 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, the turnover on the Garmin car segment, which sells navigation systems to automobile manufacturers, declined 28 percent as a result of a lower demand for dashboard mounted tomtom-devices.
Rival TomTom in February warned of a weaker-than-expected growth in automotive revenue this year.
Garmin has confidence in the growth of its watches and marine cameras to offset a decline in sales of the traditional car-navigation devices which have been its mainstay for years.
Sales in the outdoor segment, which sells a smartwatch to campers and travellers, was about 25 per cent in the quarter.
“We expect that sales in the outdoor segment to grow by about 10 percent in 2019, partly driven by the growth in watches and inReach subscriptions,” Pemble said.
But Garmin is facing more competition in the field of electronics giants Xiaomi Corp, Apple Inc, Huawei Technologies Co Ltd. Samsung Electronics Co Ltd.
The net profit rose to $190.15 million, or $1 per share, in the fourth quarter ended december.29. Excluding items, it earned $1.02 per share, beating the average analyst estimate of 80 cents, according to IBES data of Refinitiv.
The net sales increased by approximately 4 percent to $932.1 million in the quarter and beat expectations of $891.3 million.
Reporting by Sayanti Chakraborty in Bengaluru; Editing by Arun Koyyur and Mark Kuber