The current popularity of cycling and home fitness has proven to be an engine of growth for Garmin, which posted another strong quarter. The Swiss-based company, which also makes equipment for the aviation and automotive industries, reported a 25 percent sales gain to $1,072.3 million for the three months to March. 27, 2021, led by the fitness and outdoor segments.
The overall gross margin rose by 0.6 percentage points to 59.8 percent, while the operating margin gained 2.6 percentage points to 23.3 percent.
Sales in the Fitness division surged by 38 percent to $308.1 million, driven by strong demand for cycling products and other advanced wearables, which also led the operating income in the segment to rise by 138 percent to $73.7 million. During the quarter, the company launched the Lily, its smallest smartwatch to date. It also launched the Rally series of power meters, including a version designed specifically for off-road cycling, which the management said represents a new market opportunity. The segment’s gross margin expanded by 6.1 percentage points to 56.3 percent.
Revenues from the outdoor segment jumped by 46 percent to $256.4 million, led by strong demand for adventure watches, while its operating income climbed by 97 percent to $93.0 million. During the quarter, the group launched the Enduro adventure watch aimed at endurance racing. It also expanded the Approach golf tracking portfolio with three new products. The gross margin went up by 2.8 percentage points to 66.9 percent.
Elsewhere, revenues climbed by 28 percent to $209.3 million in the Marine segment and by 18 percent to $124.4 million in the Auto segment, but fell by 8 percent to $173.9 million in the Aviation segment.
Total operating expenses of $392 million in the quarter were 19 percent higher than a year earlier, due to engineering personnel costs and other expenses related to OEM programs. Net income reached $220.0 million, up from $161.2 million for the year-ago quarter.
For 2021, the group expects full-year revenues to go up by about 10 percent to $4.6 billion, with growth in all segments. The gross margin is forecast at 59.2 percent, while the operating margin may decline to 23.5 percent. The corresponding ratios were 59.3 percent and 25.2 percent in 2020.