For the fourth quarter Garmin posted net income of $180.3m, up from $87.13m in the year-ago quarter. Sales meanwhile rose almost doubled to $611.2m from $319m in the fourth quarter of 2005, thanks to the strong holiday season that has significantly lowered Garmin’s inventory levels as expected.
This is because Garmin sold two million navigation devices during the fourth quarter, a 100% rise from the same quarter in 2005. The company solidified its position in the US, and revenue from North America rose 86% to $393m from $211m.
During 2006, Garmin made an aggressive push in to Europe, as it took the fight into TomTom’s backyard in an attempt to increase its brand awareness. This push has borne fruit as sales from Europe rose 109% during the quarter to $194m from $93m. Revenue from Asia rose 60% to $24m from $15m.
Unlike TomTom, Garmin makes a wide range of satellite navigation devices, including products for the automotive, outdoor, fitness, marine, and aviation sectors. In the auto/mobile segment, revenue increased 173% to $445m in the last three months of 2006.
The outdoor/fitness segment meanwhile saw revenues increased 16% to $80m in the quarter. Revenue from the aviation segment rose 3% to $61m, but the marine segment saw a 10% decline to $25m in the quarter.
And overall for the year ending December 30, the figures were equally impressive. Garmin posted net income up 65% to $514m compared to $311m in 2005, on sales up 73% at $1.77bn from $1.03bn.
2006 was truly a remarkable year of Garmin, said Chairman and CEO Dr Min Kao. We experienced triple digit growth in our automotive product line, clearly demonstrating that our strategy effectively positions us to take advantage of the growing demand for portable navigation devices in both the US and Europe.
Garmin is based in the Cayman Islands, but is headquartered in Kansas City. During 2006 it introduced over 70 new products, all of which held the company sell an impressive 5.4 million units during the year, up 80% from 2005.
Garmin claims to occupy the number one position in the US and a solid number two market share position in Europe. Garmin operates head-to-head with the Dutch location product provider TomTom.
Garmin has been acquisitive of late, and has made two acquisitions recently. In January it $45m in cash to acquire Minnetonka, Minnesota-based Digital Cyclone Inc, which provides area-specific, up-to-the-minute weather forecasts via mobile phones for $4 a month to pilots, outdoors enthusiasts and other consumers.
The idea behind the purchase was that Garmin will incorporate Digital Cyclone’s software (My-Cast 5) into its future navigational devices for its outdoor, marine and aviation units.
Prior to that in December, Garmin acquired Dynastream Innovations Inc, a Canadian provider of personal monitoring devices, such as heart rate monitors and foot pods (pedometers) for the health and fitness markets.
There is little doubt that 2006 can be viewed as a highly successful year, and the results will please Garmin investors, who were alarmed in the third quarter when sales only rose 62%, missing Wall Street expectations. Shares in the company on Nasdaq rose 6.26% to $56.01 on Wednesday.
Looking forward, Garmin anticipates overall revenue to exceed $2.5bn in 2007 with earnings per share to exceed $2.70. It will also continue its push into Europe, with the expansion of its European distribution channel.
