Garmin’s earnings climb despite flat sales
02/19/2014 9:40 AM
02/19/2014 10:40 PM
A whiff of renewed growth at Olathe-based Garmin Ltd. pushed its stock Wednesday to its highest level since June 2008.
The maker of personal navigation devices said sales of its aviation, outdoor, fitness and marine devices nearly matched its sales of automotive and personal navigation devices in the final three months of 2013.
Total sales for all of 2013 reached $2.63 billion but were down 3 percent from 2012. Garmin said it expects sales next year to be between $2.6 billion and $2.7 billion.
Analyst Andrew Spinola at Wells Fargo Securities said the forecast for sales was impressive and “implies a good chance of a return to growth” next year. That would be a year sooner than he expected and would resolve “an issue that has been a major hang-up for investors for a very long time,” Spinola said in a note to clients.
Garmin’s stock price jumped $4.51, or 9.6 percent, and closed Wednesday at $51.68. It was the stock’s first finish above $50 since June 2008.
Earnings jumped 26.5 percent in the final three months of 2013 despite a slight dip in sales during the quarter. The company said profits benefited from lower advertising costs and a favorable swing in currency values.
The $163.6 million profit, equaling 83 cents a share, compared with $129.3 million, equaling 66 cents a share, in the fourth quarter of 2012.
Revenue in the quarter reached $759.7 million, with just under half coming from its four smaller businesses. Sales in legacy automotive and personal navigation devices fell 12 percent compared with the same quarter a year ago.
Sales grew 14 percent among its aviation, outdoor, fitness and marine businesses.
Profits benefited from a favorable swing in currency exchange rates. The changes boosted Garmin’s bottom line by $17.2 million in the recent quarter after reducing it by $3.9 million a year earlier.
For all of 2013, Garmin earned $612.4 million, compared with $542.4 million a year earlier.
Garmin also said its chief financial officer, Kevin Rauckman, has decided to leave the company in the coming year. Rauckman, a 15-year employee, “made a personal decision to change the cadence of his professional career,” the company said.
A search for his successor will determine his end date, Garmin said.
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