Garmin’s revenues jumped by 18 percent to $1,102 million in the fourth quarter, once again lifted by fitness and outdoor products. Net earnings soared by 90 percent to $360.8 million.
The outdoor segment’s sales rose by 16 percent to $294.8 million, with adventure smartwatches proving very popular. The gross margin declined by one percentage point to 66 percent, while the operating margin jumped by one percentage point to 39 percent, resulting in strong operating income growth for the segment.
During the quarter, the group announced a global collaboration with World Central Kitchen, providing inReach satellite communication devices to help support disaster relief with emergency response efforts around the globe. Since its launch in 2011, Garmin’s inReach - a satellite-based two-way messaging service - has provided remote communication and rescue facilitation in over 4,000 SOS incidents.
In the fitness division, Garmin’s quarterly sales climbed by 34 percent to $372.5 million, driven primarily by growth in wearables and contributions from the Tacx brand of cycling accessories, best known for its line of smart indoor training software, which it recently acquired. The gross margin declined by four percentage points in the segment to 48 percent, while the operating margin dipped by one percentage point to 20 percent. This was related to higher personnel-related and incremental costs associated with recent acquisitions.
The company’s aviation and marine segments both went up by 22 percent, while the automotive segment declined by 15 percent.
For the full year, the company’s revenues jumped by 12 percent to a record $3,758 million, exceeding its previous guidance. Collectively, fitness, aviation, marine and outdoor went up by 18 percent from the prior year. Sales rose by 13 percent in outdoor and by 22 percent in fitness.
One of the highlights of the year was the launch of the Fēnix 6X Pro Solar, a wearable device featuring solar harvesting technology.
Overall, Garmin’s annual gross margin improved by 0.4 percentage points to 59.5 percent, while the operating margin expanded by 1.9 percentage points to 25.2 percent. Net income climbed by 37 percent to $952.4 million.
Because of its strong performance, Garmin is projecting sales of $4.0 billion in 2020, generating a gross margin of 59.2 percent and an operating margin of 23.5 percent. Both the fitness and outdoor segments are expected to grow by 10 percent.
The management said it plans to build on its momentum in the fitness sector by launching new products while also expanding the distribution of Tacx products. In outdoor, it believes that the adventure watch category will continue to grow, driven by further innovation and new functions.