Robust demand for advanced wearables and cycling products helped Garmin to post record results for the fourth quarter of 2020. The Swiss-based company, which also makes equipment for the aviation and automotive industries, reported that its total sales rose by 23 percent to $1,351 million for the 13 weeks to Dec. 26, led by the fitness and outdoor segments.
The gross margin inched up by 0.5 percentage points to 58.5 percent, while the operating margin gained 2.4 percentage points to 28.6 percent.
Sales at the Fitness division rose by 26 percent to $470.8 million, driven by strong demand for advanced wearables and cycling products, which led the operating income in the segment to rise by 75 percent to $128.8 million. During the quarter, the company launched the Tacx Boost, an indoor trainer that features a magnetic brake and manual resistance control for cyclists.
Revenues from the outdoor segment jumped by 40 percent to $411.9 million, led by strong demand for adventure watches, while the operating income climbed by 55 percent to $179.0 million. During the quarter, the group launched the Mk2i dive watch and T1 tank transmitter, adding air integration to its line-up of dive electronics.
Elsewhere, revenues rose by 48 percent to $171.5 million in the Marine segment and by 11 percent to $140.1 million in the Auto segment, but fell by 19 percent to $156.9 million in the Aviation segment.
Total operating expenses in the fourth quarter were $420 million, a 16 percent increase over the prior year, due to engineering personnel costs and other expenses related to R&D programs. Net income declined by 7.5 percent to $333.5 million, partly due also to a tax switch from a $73.4 million gain to a $57.9 million expense.
For the full year, Garmin’s sales were up by 11 percent to $4,186 million, led by growth of 26 percent in fitness, where revenues reached a level of $1,317 million, and 23 percent in outdoor, which generated revenues of $1,128 million. The group’s gross margin inched down by 0.2 percentage points to 59.3 percent, while the operating margin remained flat at 25.2 percent. Net income improved by 4.2 percent to $992.3 million.
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.