Garmin has announced its results for the fourth quarter ended 26 December 2015 and the full 2015 fiscal year. As in previous years, Garmin’s fitness operating unit was the star performer, up 14% year on year in Q4 2015 and +16% for the full year. This compares to an onverall 3% decline in Q4 2015 and a 2% decline for the full year, as the company continues to see a weakened performance for its auto business, which still accounts for the bulk of Garmin’s revenue.
Highlights in Q4 2015 included:
- Total revenue of US$781 million with outdoor, fitness, aviation and marine collectively growing 11% year on year and contributing 66% of total revenue
- Gross and operating margins were 52.9% and 18.7%, respectively
Total operating expenses in the quarter were US$267 million, a 5% increase from the prior year. Research and development investment increased 4%, with continued emphasis on active lifestyle products in fitness and outdoor. Advertising increased 5%, driven primarily by increases in fitness and outdoor advertising to support wearables. Selling, general and administrative expense increased by 5%, driven primarily by litigation related costs and information technology.
Highlights for the 2015 fiscal year included:
- Total revenue of US$2,820 million with outdoor, fitness, aviation, and marine collectively growing 9% over 2014 and contributing 63% of total revenue
- Gross and operating margins were 54.6% and 19.5%, respectively
- Shipped approximately 16.2 million units, up 7% from prior year
Cliff Pemble, Garmin’s President and Chief Executive Officer, said “Despite the challenging global economic environment and the intensified competitive landscape of 2015, we finished strong with revenue and margins exceeding our expectations.
“We are utilizing our robust balance sheet to further diversify our revenue base in adjacent categories with our recently announced acquisitions. We believe we have strong products across all of our business segments and are well positioned as we enter 2016.”
Garmin’s fitness segment posted revenue growth of 14% in the quarter reflecting the strength of its wellness, running and cycling product offerings. Gross margin fell to 51% in the quarter, while operating margin declined to 18%. The gross margin decline was driven by ‘holiday promotions and competitive dynamics in certain product categories, as well as product mix within the quarter.’
The company saw its Beat Yesterday advertising campaign favourably impact holiday sales and the Garmin brand. Billed as a new product category by Garmin, the company also introduced Varia Vision, with an in-sight display to enhance road awareness by putting the information in cyclists’ line of sight.
The company added, ‘We believe our product line-up is very strong and look forward to another year of growth from our fitness segment in 2016.’