Simultaneously with reporting its H1 results, Swiss navigation and fitness device manufacturer Garmin adjusted its FY guidance. The group is now forecasting annual revenues of about $5.95 billion, pro forma EPS of $6.00 a share, and a 12-month gross margin of 57.0 percent. 

In Q2 ended June 29, Garmin achieved operating income growth of 20 percent to $342.0 million from $284.4 million on a 14 percent total revenue expansion to $1.51 billion from $1.32 billion. Net income rose 4.4 percent year-over-year to $300.6 million from $287.9 million, while gross margin contracted by 30 basis points to 57.2 percent from 57.5 percent.

The EMEA paced geographic growth in Q2, rising 18 percent year-over-year to $542.0 million from $457.6 million. Americas’ sales, meanwhile, increased by 15 percent to $740.6 million, and sales in APAC increased by 1 percent year-over-year to $224.1 million.

A closer look at Q2 business segment results

  • Fitness revenues moved 28 percent higher year-over-year to $428.4 million, driven by growth in wearables as operating income grew by 98 percent to $107.6 million. Segment gross margin jumped up by 550 basis points to 57.2 percent. The unit celebrated Global Running Day with Garmin users running nearly 11 million miles, more than 2 million miles more than the previous year.
  • Outdoor revenues fell nearly 2 percent to $439.9 million due to lower adventure watch sales. Operating income was down by 2 percent to $135.6 million compared to $138.3 million, but gross margin improved by 210 basis points to 64.6 percent. The Approach Z30 smart laser range finder, which sends distance measurements to compatible Garmin smartwatches or the Garmin Golf smartphone app, was launched.
  • Marine revenues, bolstered by the acquisition of JL Audio, rose by 26 percent to $273.0 million from $215.8 million in the year-ago period. Operating income grew 29 percent to $59.9 million, but segment gross margin declined by 170 basis points to 54.1 percent from 55.8 percent.
  • Automotive revenues raced ahead by 41 percent to $147.2 million, fueled by growth in domain controllers. The year-over-year operating loss improved by 34 percent to a loss of $11.6 million. The gross margin was 16.5 percent versus 23.8 percent in the year-ago period.

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