Garmin profit down, but showing growth in Q2

CAYMAN ISLANDS — Garmin Ltd. saw Marine segment revenue decrease 15 percent to $60 million in the second quarter, the company reported this week. However, though down significantly, its lower overall earnings beat Wall Street estimates, sending the company’s share price up.

Overall, second quarter results for the period ended June 27 showed total revenue of $669 million, down 27 percent from $912 million in the second quarter of 2008. Automotive/Mobile revenue decreased 31 percent to $437 million; Outdoor/Fitness revenue decreased 9 percent to $108 million; and Aviation revenue decreased 28 percent to $64 million.

The company noted it had posted sequential revenue growth of 53 percent with all segments showing improved revenues and margins. According to Garmin, that is a sign that the first quarter may have represented the low point of declining revenue caused by the global economic crisis.

The marine segment posted sequential growth of 58 percent as the company entered the boating season.

“While the general marine market was down as much as 40 percent, we were able to significantly outperform the market on the strength of our marine product lineup. We were pleased with the revenue level and the margins that the business was able to deliver in the quarter,” said Min Kao, Garmin’s CEO. “While we do not expect to post growth until the macroeconomic conditions improve, we do expect that year-over-year declines will continue to improve throughout the year.”

Garmin also reported that it continues to lead in worldwide personal navigation device market share.

“Independent market share research indicates that we have expanded our leadership position in the North American PND market with approximately a 57 percent share, which is up sequentially from 53 percent in first quarter,” Garmin stated. “We maintained a market share of approximately 20 percent in Europe.”

Also, although North American and European revenues were down 24 percent and 36 percent respectively, the company saw a 21 percent increase in its Asian revenue to $35 million.

Diluted earnings per share decreased 32 percent to $0.81 from $1.19 in second quarter 2008. Gross margin improved to 52.6 percent compared to 45.8 percent in second quarter 2008 and 44.9 percent in first quarter 2009. Operating margin was up to 29.8 percent compared to 13.3 percent in first quarter 2009 and 26.2 percent in second quarter of 2008.

Also, the company generated $246 million of free cash flow in second quarter 2009 for a cash and marketable securities balance of over $1.5 billion.

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