Garmin 4Q marine revenue flat

CAYMAN ISLANDS – Marine segment revenue at Garmin Ltd. (Nasdaq: GRMN) was flat at $33 million during the fourth quarter ended Dec. 27, the company reported in a statement yesterday morning.

Total company revenue declined 14 percent in the quarter to $1.048 billion, largely due to a drop in its automotive/mobile segment.

Despite this drop in revenue, the company said it was able to maintain a healthy gross margin of 41.1 percent, compared to 44.3 percent in third quarter 2008 and 41.8 percent in fourth quarter 2007. Its operating margin was 22.6 percent, compared to 24.6 percent in third quarter 2008 and 25.7 percent in fourth quarter 2007. Garmin generated $340 million of free cash flow in the fourth quarter for a cash and marketable securities balance of just over $973 million, it added.

The manufacturer also reported a significant inventory reduction from third quarter 2008 of $274 million resulting in year-end 2008 inventory of $425 million. This was “accomplished in part by eliminating overtime labor and contract workers within our Taiwan factories, proving we can scale manufacturing as needed,” Garmin reported.

For fiscal 2008, total revenue was $3.49 billion, up 10 percent from $3.18 billion in 2007. That revenue jump was due in part to a 1-percent increase in marine segment revenue, which hit $204 million in 2008.

The company attributed that marine revenue growth “to the strength of our product portfolio and our market share gains during a year in which the marine industry suffered significantly.” Garmin also suggested that it “remained on-target” versus its long-term goal of 55 percent gross margin in marine.

“While we expect 2009 to be a very difficult year for the marine industry, we are pleased with the progress that we have made toward offering a full network of marine products and the OEM opportunities associated with our growing product portfolio,” said Dr. Min Kao, chairman and CEO. “We will continue to commit research and development resources to be the leader in the marine electronics market.”

During fiscal 2008, the company experienced a total gross margin of 44.5 percent and a 24.7-percent operating margin, which was better than expected, according to Garmin.

“We continued to experience a challenging economic environment in the fourth quarter with worsening trends throughout the period,” commented Kao. “However, we were able to demonstrate the power and agility of our vertical integration business model by responding quickly to the changes and scaling our production outputs to match demand. This allowed us to maintain healthy margins in the quarter, as well as significantly reduce inventory levels.”

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