Garmin shares surge 15 percent as new direction fuels strong forecast
By Sayanti Chakraborty (Reuters) - Garmin Ltd on Wednesday forecast full-year revenue and profit above expectations along with strong fourth-quarter results, sending its shares up 15 percent to their highest in more than a decade. The company bounced back strongly in the past year after a smartphone-driven slide in demand for the car satnavs that made it famous. The bounce has been driven mainly by growing demand for smartwatches and other wearable fitness devices that track everything from heart rates and calories to a pet's movement.
By Sayanti Chakraborty
(Reuters) - Garmin Ltd on Wednesday forecast full-year revenue and profit above expectations along with strong fourth-quarter results, sending its shares up 15 percent to their highest in more than a decade.
The company bounced back strongly in the past year after a smartphone-driven slide in demand for the car satnavs that made it famous.
The bounce has been driven mainly by growing demand for smartwatches and other wearable fitness devices that track everything from heart rates and calories to a pet's movement.
The company, which competes with the likes of Fitbit Inc and TomTom, forecast full-year profit of about $3.70 per share and revenue of about $3.5 billion.
Analysts were expecting profit of $3.52 per share and revenue of $3.43 billion, according to IBES data from Refinitiv.
Global wearable fitness trackers market is on track to generate revenue of $48.2 billion by 2023, led by adoption of fitness tracking apps and rise in demand for wireless health monitoring devices, according to a report by research firm P&S Market Research.
In the reported quarter, three of Garmin's five units - aviation, marine and outdoor - reported double-digit revenue growth.
The company is seeing strong demand from airline customers for its ADS-B based products, which broadcasts a plane's position and is required by the U.S. regulators by the beginning of 2020.
"ADS-B continues to be a driver of solid performance in the aftermarket, while new platforms and favorable market conditions led the growth in the OEM category," Chief Executive Officer Clifton Pemble said on a post-earnings conference call with analysts.
However, revenue at Garmin's auto segment, which sells navigation devices to automakers, fell 28 percent due to lower demand for dashboard-mounted satnav devices.
Rival TomTom had in February warned of weaker-than-expected growth in automotive revenue this year.
Garmin has been relying on the growth of its watches and marine cameras to offset a decline in sales of its traditional automobile navigation devices that have been its mainstay for years.
Sales in its outdoor segment, that sells smartwatches to campers and travelers, rose about 25 percent in the quarter.
"We anticipate revenue in the outdoor segment to grow by about 10 percent in 2019, driven partly by growth in watches and inReach subscriptions," Pemble said.
But Garmin is facing greater competition in the area from electronics heavyweights Xiaomi Corp, Apple Inc, Huawei Technologies Co Ltd and Samsung Electronics Co Ltd.
Net income rose to $190.15 million, or $1 per share, in the fourth quarter ended Dec.29. Excluding items, it earned $1.02 per share and beat the average analyst estimate of 80 cents, according to IBES data from Refinitiv.
Net sales rose about 4 percent to $932.1 million in the quarter and beat expectations of $891.3 million.
(Reporting by Sayanti Chakraborty in Bengaluru; Editing by Arun Koyyur and Shailesh Kuber)
This story has not been edited by Firstpost staff and is generated by auto-feed.
By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States
BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.